(Bloomberg) -- Former American International Group Inc. ChairmanMaurice “Hank” Greenberg claims the U.S. bailout of the companycheated shareholders out of at least $25 billion.

On Wednesday, the judge presiding over his lawsuit will hearfinal arguments in the long-running case. If previous rulings and afinal list of questions posed to both sides are any measure, he maybe leaning toward Greenberg.

U.S. Court of Federal Claims Judge Thomas Wheeler sided with the89-year-old executive several times during the trial. Now, he hasasked lawyers for both sides to address five questions, includinghow to measure possible harm to shareholders.

That suggests Wheeler may be “leaning toward a finding ofliability,” said Elliott Stein, a legal analyst for BloombergIntelligence. While phrased evenhandedly, the judge’s questions are“consistent with rulings before and during the trial that seem tofavor shareholders.”

The eight-week trial featured defenses of the AIG rescue by thebailout’s masterminds, former Treasury Secretary Henry Paulson,ex-Federal Reserve Chairman Ben Bernanke and Timothy Geithner, theformer Treasury secretary who was president of the Federal ReserveBank of New York in 2008. All three said actions they took easedAIG’s calamitous condition and avoided broader damage to the U.S.economy that would have resulted if the insurer had defaulted oncounterparty claims by banks.

Starr’s Claims

Greenberg’s Starr International Co. contends the governmentexceeded its authority by demanding an 80% stake in New York-basedAIG in exchange for an initial $85 billion loan at a 14% interestrate.

Though the AIG bailout ballooned to $182 billion, the insurereventually returned to profitability and repaid the assistance in2012, leaving the government with a $22.7 billion profit. Starr,the Switzerland-based holding company run by Greenberg, seekscompensation for AIG investors who signed onto the suit for thedilution of their shares as a result of the government’s equitystake.

The judge’s other questions concern shareholder rights, the AIGboard’s voluntary consent to the loan terms and whether a possiblebankruptcy is relevant to the analysis of liability or damages. Averdict isn’t expected for at least several weeks and appeals couldtake years.

Wheeler could find the government acted illegally yet not awarddamages, Stein said.

A ruling against the government is likely to increasecongressional pressure on the Federal Reserve Board of Governors toenact policies that prohibit rescues of individual companies. Itmight also trigger a fight between the government and AIG, whichisn’t a party to the suit, over who is responsible for damages.

Stock ‘Taking’

John Echeverria, a Vermont Law School professor, said Wheelerappears to be wrestling with the nature of the government’sacquisition of AIG stock.

The judge asked lawyers to address whether Starr’s claim of anillegal taking -- a constitutional claim -- should be viewed as a“regulatory taking” or a “physical taking.”

A physical taking, akin to the government seizure of propertywhen it asserts eminent domain, would bolster Starr’s case,Echeverria said. Such a determination wouldn’t require the judge toscrutinize the government’s reason for its action and its economiceffects, he said.

“If it’s a regulatory taking, a much more deferential standardtoward the government applies,” said Echeverria, who writes theTakings Litigation blog. “How he resolves that question probablywill resolve the case, at least at his level.”

Voluntary Loan

The government argues there was no taking of either kind becausethere was no economic harm.

“Absent the rescue, AIG would have collapsed into bankruptcy,rendering Starr’s shares worthless,” government lawyers wrote incourt papers filed in Washington.

The bailout terms were patterned on a private rescue headed byGoldman Sachs Group Inc. and JPMorgan Chase & Co. that wasabandoned shortly before the New York Fed stepped in, according totrial testimony.

Criticism of the bailout included that the Fed was unfairlypicking winners and losers, letting Lehman Brothers Holding Inc.file bankruptcy on Sept. 15, 2008, the day before the New York Fedbegan the AIG bailout.

A win for the government would boost the central bank’sindependence and give its leaders leeway to interpret the Fed’semergency lending powers more broadly, said Sarah Binder, a seniorfellow at the Brookings Institution who studies the Fed’srelationship with Congress.

Judge’s Criticism

Greenberg headed AIG for almost four decades before leaving in2005. Starr, AIG’s largest shareholder in 2008, filed its suit inNovember 2011.

In the 41 months since, Wheeler, an appointee of RepublicanPresident George W. Bush, rebuffed government bids to dismiss thesuit before trial and criticized the U.S. for pressuring the AIGboard to not join the case.

Wheeler ordered the government to turn over more than 30,000e-mails and other documents after ruling in November that it hadwaived its right to confidentiality with outside lawyers.

Those documents show legal advisers to the New York Fed lookedfor ways to avoid accountability to shareholders for the bailout.They also expressed doubt about their authority to demand AIG stockas a condition of the loan.

“The government is on thin ice and they know it,” an outsidelawyer for the New York Fed wrote to colleagues. “But who is goingto challenge them on this ground?”

Those documents don’t change the underlying argument that theFed had the legal authority to step in to save AIG, governmentlawyers argue.

275,000 Shareholders

If Greenberg wins his case and is awarded damages, they would goto Starr and about 275,000 other shareholders in the case, not toAIG, which declined to join the suit because of publicpressure.

Damages initially would be paid out of the Judgment Fund, a potof money administered by the Treasury Department used to pay peoplewho win financial awards from the government.

The U.S. could turn around and seek help paying from AIG, which,according to the government, agreed as a condition of the bailoutloan to pay damages resulting from litigation over the rescue.

AIG’s 2014 annual report acknowledges “a material adverse effecton our business” if reimbursement is required. The company said inthe filing for the first time that it would fight an attempt by theU.S. to collect.

The case is Starr International Co. v. U.S., 11-cv-00779, U.S.Court of Federal Claims (Washington).

--With assistance from Sonali Basak in New York.

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