HS&S Serves as Co-Counsel in $37+ Billion AIG Litigation Victory

Forty-six executives of AIG Financial Products won a significant ruling in a years-long fight over more than $37 billion in intercompany funding. The decision clears the way for them to pursue the hundreds of millions of dollars in deferred compensation they allege that AIG owes them. Hurwitz Sagarin & Slossberg is proud to serve as co-counsel on the case alongside Kobre & Kim.

The dispute centered on the proper characterization of $37 billion dollars advanced to AIG Financial Products by AIG through a revolving credit facility. While AIG maintained that the advances constituted a debt owed by AIG financial products, the former executives contended that the advances were equity contributions. The determination would govern whether AIG’s claim in the bankruptcy would rank ahead of or behind the executive’s own claims in terms of repayment.

The matter originated in Connecticut and was later transferred to the Delaware bankruptcy court following AIG Financial Products’ Chapter 11 filing in 2022. Following a 9-day trial, the court ruled in favor of the former executives. The court found that the economic reality of the transactions supported recharacterization of the advances as equity. In the alternative, the court held that even if the advances constituted debt, AIG's claim would be equitably subordinated to the former executives' claims on account of AIG's inequitable conduct.

The ruling resolves the threshold questions of characterization and priority in the former executives' favor. It does not determine the amount of their ultimate recovery. That determination, concerning the hundreds of millions of dollars in deferred compensation the former executives seek, will proceed in a subsequent phase of the litigation.

Hurwitz Sagarin & Slossberg is a litigation boutique based in Milford, Connecticut. For nearly fifty years, the firm has represented clients in complex civil and commercial litigation in Connecticut's state and federal courts. HS&S regularly serves as local counsel and co-counsel for out-of-state firms litigating in Connecticut, and for Connecticut matters that extend into other jurisdictions, providing on-the-ground knowledge of Connecticut procedure, courts, and practice while working alongside national and international co-counsel on complex, multi-jurisdictional disputes