AIG Financial Products Corp. seeking to quash a lawsuit filed against her by former executives over money owed to them on their deferred compensation accounts was dismissed by a state Superior Court judge.
The lawsuit was filed in 2019 against the international company’s headquarters in Connecticut in Wilton by 46 senior former employees. She argues that, as AIGFP weathered the 2008 financial crisis, it forced complainants who participated in some bonus compensation plans to defer significant portions of their bonus and other compensation.
One such plan required each claimant to carry over payments of their previously earned compensation into deferred clearing accounts held by AIGFP on behalf of each participant.
The AIGFP was to make installment payments with interest on the applicants’ Deferred Compensation Plan (DCP) and Special Incentive Plan (SIP) account balances. The company was also allowed to use the money from these DCAs and SIP accounts as capital to fund its operations, provided that it re-established and subsequently paid the money it took from those accounts.
“Between 2007 or around the beginning of 2009, AIG and AIGFP were said to have been on the verge of insolvency and had to increase their liquidity,” said the lawsuit. Around the same time, AIGFP credited its losses on the DCA and SIP account balances of the plaintiffs – which led to the fiction that the DCA and SIP account balances were negative – in order to avoid to pay the complainants their deferred compensation and bonuses. Subsequently, AIGFP stopped making installment payments to the complainants. “
As a result of these actions, “the plaintiffs suffered damages of more than 185 million dollars”, indicates the lawsuit.
AIGFP sought to close the case on the grounds that it had acted in good faith and that the agreements with the former employees were subject to interpretation.
Connecticut Superior Court Judge Sheila Ozalis rejected those arguments, allowing the case to proceed.
Attorney Steven Perlstein of the New York law firm Kobre & Kim represents the plaintiffs.