There's a very interesting contrast between this news story, Cuomo Says Some A.I.G. Bonuses Will Be Repaid and the legal opinion AIG got on March 16, 2009 regarding its obligation to pay the bonuses (source: the American Lawyer).
This letter is going to be the fodder for a lot of law courses. The question it answers is artfully narrow; what it leaves out, and why it leaves it out, are fascinating issues that will engender many discussions in Professional Responsibility and Corporate Law.
A bankruptcy judge would stuff that analysis into a wastebasket and tell esteemed counsel to try again. Nonpayment of the retention is not a bad faith breach (AIG is bankupt, for god’s sake), therefore, there is no liability for double damages.