American International Group Inc (NYSE:AIG)’s sale of ILFC could be endangered as the Chinese buyers missed a key deadline to pay in their deal.

AIG

The U.S. insurance giant said in its 8-K filing with Securities Exchange Commission that it had not received the deposit stipulated in the December purchase agreement in time.

AIG Agreed To Sell Upto 90 Percent Of Its Business

American International Group Inc (NYSE:AIG) said last December that it agreed to sell up to 90 percent of its business, the International Lease Finance Corporation, to a consortium of Chinese groups. The deal valued the plane leasing unit, ILFC, at about $5.28 billion.

According to the December regulatory filing, the deposit was for about 10 percent of the purchase price.

The consortium comprised of New China Trust, part-owned by Barclays PLC (NYSE:BCS) (LON:BARC), China Aviation Industrial Fund and P3 Investments Ltd. The consortium was to buy 80.1 percent of ILFC and the deal included an option to sell an additional 9.9 percent stake. China’s biggest bank, Industrial and Commercial Bank of China was meant to join the consortium after the deal got regulatory clearances. Besides, New China Life Insurance Company also was to join the consortium.

The deal was earlier expected to be closed during the second quarter. The International Lease Finance Corporation in its regulatory filing earlier this month indicated that the deal is set to close in 2013.

As a result of the payment default, American International Group Inc (NYSE:AIG) now has the right to back out of the sale of ILFC. However, despite the Chinese consortium’s failure to post a $422.75 million deposit by the required date, AIG  is trying to press ahead with the deal to sell ILFC to the Chinese bidders.

ILFC is one of the world’s largest players in the market for buying aircraft besides leasing them to airlines. It owns or manages nearly 1,000 planes.

After its 2008 bailout by government, the sale of ILFC was considered one of the last pieces of American International Group Inc (NYSE:AIG)’s restructuring plan. The insurance giant’s revival plan includes selling off non-core operations. Besides, the insurance giant pared down some of its core businesses that includes a global property-casualty company and a big U.S. life-insurance and retirement-savings business.

On the other hand, China’s leadership has identified its burgeoning aerospace industry as a key industrial priority. It has been buying a range of home-grown commercial aircraft, as well as related services, such as maintenance and finance.