UPDATE: This article, originally published at 1:24 p.m. on Tuesday, June 16, 2015, has been updated with Hank Greenberg's plans to appeal the ruling that denied him damages.
NEW YORK (TheStreet) -- Hank Greenberg's victory in a lawsuit claiming the government's 2008 bailout of AIG illegally penalized shareholders looks like a win in name only.
Yes, a federal judge ruled that the government lacked the legal authority to take an 80% equity stake in the insurance giant, which eventually received $182 billion to prevent its collapse.
But Greenberg, who filed the suit through his Starr International firm, and other shareholders were awarded nothing since the judge also found that AIG would have filed for bankruptcy without the bailout. In that case, investors would likely have lost everything.
It turns out, ironically, that the decision not to award damages carried a big benefit for New York-based AIG, even though it didn't directly help shareholders. The company's shares popped 3% on Monday, largely because of an obscure clause buried in reams of bailout filings and stipulations that indemnified the government from lawsuits.
If Greenberg -- the company's former CEO and one of its largest shareholders at the time of the bailout -- had won damages, the clause "would have subjected AIG to reimbursing Greenberg and any other member of the [plaintiff] class," said John Nadel, a managing director of equity research with Piper Jaffray.
The agreement held the government harmless from any losses or liabilities connected with the bailout in any way, even after the money was repaid, according to a September 2008 regulatory filing.
"I think AIG would have challenged it, particularly given the court's ruling that taking the equity stake was in fact unconstitutional, and I think AIG would have at least had legal ground to argue whether the indemnification was valid," Nadel said.