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AIGFP’s main debt, according to a bankruptcy filing: $37.4bn owed to its parent. For its part, AIG has never expected repayment. The sum was part of a bigger pool of losses it booked in 2008.

Specifically, the debt stems from emergency loans received by AIG from the US Federal Reserve in 2008. AIG extended a portion of the bailout money to the unit, in the form of intercompany loans, to satisfy AIGFP’s obligations to counterparties, the bankruptcy filing states.

Although the intercompany loans are still owed to AIG, “the filing will have no net impact on AIG’s consolidated financial statements.” All of AIG’s and the unit’s financial-crisis losses were recognised in AIG’s financial statements in 2008, according to the filing.

Back in its heyday, AIGFP was based in Wilton, Connecticut, with operations in London, Hong Kong and Tokyo, and employed many mathematicians, academics and traders. The business was a leader in writing “credit-default swaps,” under which it hedged companies from losses on their corporate debt.

AIGFP’s undoing was a massive volume of swaps involving subprime mortgage-backed securities for major banks worldwide.

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By 2011 AIG had unwound the most problematic derivatives, and was left with trades of lower complexity and risk. AIG said back then that it didn’t make economic sense to unwind those immediately. They have been run off over time, under the direction of employees in other parts of AIG.

AIGFP has existed over the years as a legal entity, largely to resolve outstanding litigation.

Only one lawsuit remains of the many filed against the unit in connection with the financial crisis, AIG said in the regulatory filing. The pending suit, in a Connecticut state court, was brought in 2019 by 46 former Connecticut-based AIGFP executives who are seeking to recover profit-sharing bonuses under deferred-compensation plans that predate the financial crisis.

AIG’s legal position is that the ex-employees aren’t entitled to any recoveries because the crisis-era losses eliminated all of the profit-sharing, bonus-account balances, and AIGFP never returned to profitability, according to the filing.

The lawsuit is similar to one brought in 2014 by former London-based executives of AIGFP and related entities. In 2020, an English Court of Appeal ruled in favor of AIGFP.

AIG said that, upon the unit’s bankruptcy filing, any financial obligation of AIGFP under the deferred-compensation plans is subordinate to its other liabilities. Under the unit’s plan of reorganisation, the only funds available to the 46 former executives to extinguish their claims would be an equal share in a limited pool of $1m.

AIG’s filing said that an independent special committee of AIGFP’s board of directors determined that the filing and plan of reorganisation “present the best path forward to conclude the wind-down” of the unit. Alvarez & Marsal and Latham & Watkins are advisers to AIGFP.

Write to Leslie Scism at leslie.scism@wsj.com

This article was published by The Wall Street Journal, a fellow Dow Jones Group title