Business Week offers an interesting look at what it takes to unwind a credit default swap contract that lacks a market price and willing transactors. While many of the most toxic of the CDSs have been taken off the books--those written on CDOs--there are still a lot of plain vanilla CDSs that have to be dealt with. 

"Some will expire on their own, like the $234 billion of swaps that are expected to come off the books in the next year and a half. Others will be terminated at the request of the owner. AIG can opt to let the contracts expire. But $34 billion worth of CDSs is set to run down over the next five-or more-years, which would seem to run counter to its avowed plan to wind the contracts down as quickly as possible. If AIG wants out, it will have to go back to the other side of those trades and negotiate an exit." That's basically a manual process of calling and negotiating. It doesn't take a rocket scientist, but it does require a bit of sales-trader savvy.  

For more:
- here's the article

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