September 15, 2008 5:18 PM

AIG Leans On Sullivan & Cromwell Heavy Hitters in Struggle to Stay Afloat

Posted by Ben Hallman

Five Sullivan & Cromwell partners, including chairman H. Rodgin Cohen, are representing AIG as the insurance giant struggles to stay afloat, The AmLaw Daily has learned.

Shares of A.I.G. tumbled 60 percent in trading early Monday on fears that the company lacked capital to make up for a threatened cut in its credit rating. A.I.G. has lost most of its value this year due to losses on credit default swaps, derivatives that insure investors against defaults by a bond issuer. 

In the afternoon, A.I.G. seemed to take a step back from the brink of collapse after New York governor David Paterson said the company could borrow $20 billion from its subsidiaries. The company also is seeking a $20 billion bridge loan from the Federal Reserve, according to news reports.

Reached by phone, Cohen declined to comment on the state of negotiations, except to say that they were ongoing. According to various news reports, New York insurance commissioner Eric Dinallo has been heavily involved in discussions over the future of the insurer that began this weekend. Dinallo’s office did not return requests for comment.

This is the second Wall Street-shaking matter for Sullivan in as many weeks. Cohen also represented Fannie Mae in its government bailout last week.

The Sullivan team includes partners Michael Wiseman, Robert Reeder III, Mark Welshimer, and Robert DeLaMater.

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