Ex-AIG Employees Move to Dismiss Unit’s ‘Bad Faith’ Bankruptcy

Former executives of AIG Financial Products Corp. have moved to throw out its bankruptcy case, saying it’s designed to avoid paying hundreds of millions of dollars worth of deferred compensation.

The bankrupt AIG Inc. unit, which notably lost billions during the subprime mortgage crisis, filed for Chapter 11 last month in a “bad faith” gambit to halt Connecticut state court litigation and avoid paying valid debts, the ex-employees told the US Bankruptcy Court for the District of Delaware in a redacted filing Monday.

Instead of litigating the employees’ $640 million in claims to repay what it borrowed from compensation plans ...