NY Times DealBook Blog Imagines a Hypothetical A.I.G. Bankruptcy

NY Times DealBook Blog Imagines a Hypothetical A.I.G. Bankruptcy

In a March 2 NY Times DealBook blog post, David E. Wood of Anderson Kill Wood & Bender argues that if A.I.G. were to file for bankruptcy, the conventional wisdom that A.I.G. insurer subsidiaries’ assets are beyond the direct reach of A.I.G. creditors may well be challenged. He argues that A.I.G. is such a large and multi-headed entity that there will be no doubt that the trustee or creditors’ committee involved in the wake of a bankruptcy filing will most certainly be “well-funded, creative and aggressive” with a motive to evade or frustrate state insurance regulators’ efforts to protect the subsidiaries’ assets. Another possibility would be that the bankruptcy of the parent company would set in motion a chain of events leading to the insolvency of the A.I.G. insurance subsidiaries. Ultimately, Wood argues, if creditors are successful, the actual or perceived value of A.I.G. carrier policies could be decreased. And if that scenario were to come to pass, Wood warns, then we will have a front row seat at finding out if the failure to prop up A.I.G. will truly lead to an apocalyptic economic meltdown of the financial system. 
 
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