Details are slowly leaking out about how close AIG came to following Lehman Brothers into bankruptcy, only to have the Federal Reserve Bank of New York bail it out with an $85bn (£47.5bn) loan, reports The Am Law Daily.

Davis Polk & Wardwell represented the Treasury Department and the Federal Reserve on the deal, according to the firm. The team was led by partners Bradley Smith and Marshall Huebner.

Two sources with direct knowledge of the deal say Sullivan & Cromwell represented AIG, while Simpson Thacher & Bartlett represented AIG's board of directors.

Sources say Rodgin Cohen led the Sullivan team, capping off a busy two-week period in which he advised both Fannie Mae and AIG on their government bailouts.

Kevin LaCroix of Oakbridge Insurance Services, the author of D & O Diary, a blog focused on management liability issues, has analysed several aspects of the government bailout, including the interest rate AIG will have to pay, which stands at a whopping 11.31%. If AIG draws the full $85bn the Federal Reserve has offered, it will be liable for $9.61bn (£5.37bn) in interest.

LaCroix also looks at the question of whether the sale of AIG's non-core assets could even cover the $85bn loan, while the Wall Street Journal quotes an analyst who estimates AIG's non-insurance assets could raise about $42bn (£23.5bn).

Another key question is what the US Government intends to do with its 80% interest in AIG, and whether it will be involved in the insurer's future business decisions. As LaCroix puts it: "Left unanswered in the Federal Reserve press release is the question of what this development means for AIG's continuing business operations. The primary goal of the Fed facility is the orderly sale of AIG's businesses. What does this imply about the future of AIG's operating companies? And what will be left of AIG after the 'orderly sale'?"

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The Am Law Daily is the website of The American Lawyer, Legal Week's US sister title.