High Court orders AIB to pay £21m into court

The High Court has ordered AIB to pay into court interest on junior bonds that are the subject of a legal row.

The bonds are held by US-based investment firm Aurelius Capital which is opposing a move by the Government to impose losses on subordinated bondholders at the bank.

Aurelius Capital argued today that AIB is "contractually bound" to pay the investor £21m owed in interest on its bonds by tomorrow.

That is despite a court order secured by the Finance Minister Michael Noonan in April dismantling the interest payments that would otherwise be due.

That order, known as an SLO, aims to impose massive losses on subordinated bondholders at the bank and is under challenge by Aurelius.

It claims AIB will be in default if it doesn't pay interest on the bonds tomorrow, because even if Aurelius loses its legal challenge, the order made in April will only take effect when the case has been decided.

That contention has been disputed by the State and the bank and Judge John Cooke has decided that until there is an outcome in the proceedings, AIB should pay the monies into court.