American International Group Inc. and Brookfield Asset Management Inc. agreed to end a 2009 lawsuit in which Brookfield sought a judge’s ruling that the insurer’s collapse triggered default provisions in interest-rate swaps.

Brookfield sued in federal court in Manhattan, alleging New York-based AIG and its Financial Products unit “refused to concede the occurrence” of a default even though AIG got a $182.3 billion bailout package from the U.S. government.

Brookfield, based in Toronto, and its Brysons International Ltd. unit, which joined in the suit as a plaintiff, sought a declaration from a federal judge that the insurer’s collapse triggered default provisions in two 1990 interest-rate swaps. AIG had said that Brookfield, based in Toronto, had attempted to evade a $1.5 billion debt.

Brookfield, Brysons and AIG notified U.S. District Judge Ronnie Abrams in filings today that the companies agreed to end the suit and that each party would “bear its own costs, fees and expenses.”

Andrew Willis, a Brookfield spokesman, didn’t immediately respond to a phone call seeking comment on the court filing.

Jon Diat, a spokesman for AIG, declined to comment.

In August, AIG agreed to accept $905 million from Brookfield to resolve the litigation.

The case is Brookfield v. AIG, 09-cv-8285, U.S. District Court, Southern District of New York (Manhattan).

Editors: Peter Blumberg, Andrew Dunn