The cash-strapped American insurance company AIG has been ordered to "cease and desist" improper use of taxpayers' money, after senior executives flew by private jet to a partridge hunting party at a 17th century English manor house.

New York state's attorney general, Andrew Cuomo, yesterday accused AIG of breaking the law by bankrolling "unwarranted and outrageous" junkets in the wake of a $123bn bail-out by the US government to save the firm from bankruptcy.

"The party is over," he said at a press conference. "No more hunting trips. No more luxury resorts. They are not going to have the party and leave the hangover for taxpayers."

A Sunday newspaper revealed that a group of AIG's European bosses spent more than £50,000 on a trip to Plumber Manor in Dorset to shoot birds last week, with several executives using a private plane to travel from Germany. The getaway came hot on the heels of a $440,000 retreat for insurance salesmen at a beach resort in California.

In a letter to AIG's board of directors, Cuomo said such expenditures could be deemed fraudulent conveyances under New York law. "The board should immediately cease and desist these improper and extravagant expenditures, which exploit the taxpayers," said the letter. "Immediate cooperation is expected, or we will commence legal action."

He demanded that the AIG board stop "unwarranted and outrageous expenditures" and recover any past ones that were "unreasonable", citing a $5m bonus and $15m "golden parachute" that AIG awarded Martin Sullivan, its chief executive, in March. Beset by billions of dollars in liabilities on insurance policies protecting financial organisations against default on investments, AIG teetered on the brink of collapse last month. The Federal Reserve bailed out the firm with an $85bn emergency loan. Last week, the insurer was granted a further $38bn credit line to avert any further deterioration in its finances.

An AIG spokesman told Bloomberg News that the events ought not to have happened: "The events referred to should have been cancelled. It's regrettable they weren't. We've issued a policy cancelling all such events."

AIG aims to sell businesses to raise funds to pay back the government's loans. But a former boss, Hank Greenberg, warned this week that the company could struggle to come up with sufficient money, and that it runs the risk of eventual liquidation.