Brookfield Asset Management Inc. (BAM) and its Brysons International Ltd. unit sued American International Group Inc. (AIG) on Wednesday, seeking to end Brysons' financial obligations under an interest-rate swap agreement.

The lawsuit, filed in U.S. District Court in Manhattan, alleges that AIG's financial woes have triggered several default provisions under the swap agreement. As a result, Brysons claims it has no further financial obligations to the AIG Financial Products unit, according to the complaint.

AIG accepted billions of dollars of U.S. government funding after it nearly collapsed last year.

Brysons borrowed $200 million from the financial products unit in 1990 via a complex structure that included the sale of debentures and two interest-rate swaps, according to the complaint. The $200 million in debentures has been repaid.

In May, the parties had entered a standstill agreement, which was set to expire Wednesday, in order to discuss resolving the dispute, according to the lawsuit.

Brysons' next payment obligation to AIG Financial Products is about $30 million in October 2010, according to the complaint.

"Brookfield's assertions are red herrings, which distract from the plain facts of the case: we had a contract, AIG performed as promised and Brookfield did not," AIG spokesman Mark Herr said in a statement. "Now Brookfield is trying to use the financial crisis as a pretext to evade its obligation to pay us what they owe us."

AIG believes it is presently owed about $1.2 billion under the agreement.

-By Chad Bray, Dow Jones Newswires; 212-227-2017; chad.bray@dowjones.com