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Editor: Eric C. Chaffee
Univ. of Toledo College of Law

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Thursday, July 5, 2012

Claims Court Allows Former Controlling Shareholder of AIG to Sue Government

Starr International Company, which was the controlling shareholder of AIG before the federal bailout, sued the U.S. government on a variety of theories.  Essentially it asserted that the government, rather than providing liquidity support offered to other financial institutions, exploited AIG's vulnerable financial situation by becoming the controlling lender and controlling shareholder in September 2008.  According to Starr, the government took control of AIG so that it could use the corporation and its assets to provide a "backdoor bailout" to other financial institutions and that the government took AIG's property without due process or just compensation.  On July 2, the U.S. Court of Federal Claims granted in part and denied in part the government's motion to dismiss the claims.  It also deferred the issue of whether Starr adequately pled a demand on AIG's board or the futility of such a demand.  The government is required to file an answer by July 16.  (Download StarrvsUS11212011[1]

http://lawprofessors.typepad.com/securities/2012/07/claims-court-allows-former-controlling-shareholder-of-aig-to-sue-government-.html

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