AIG Unit Slams Former Executives’ Bid to Toss Bankruptcy Case

AIG Financial Products Corp. is defending its use of bankruptcy as a way to resolve genuine financial distress—not thwart litigation brought by disgruntled former executives over unpaid bonuses.

The AIG unit, which filed for bankruptcy in December owing $37.4 billion on an intercompany loan, urged the US Bankruptcy Court for the District of Delaware on Tuesday to reject efforts from the former executives to dismiss what they have called a “bad faith” Chapter 11 case.

The company, in a court filing, said it has been accruing $133 million in monthly interest liabilities on the revolver loan it took out to ...