Allied Irish Banks will ask the High Court tomorrow to rule whether or not it has to make certain coupon payments to junior bondholders this weekend.

The coupons were due for payment on Saturday but may not have to be paid if an order clearing the way for a severe debt buyback scheme survives a continuing legal challenge brought on behalf of some junior bondholders in AIB, the court heard.

Paul Gallagher SC, for AIB, said if the legal challenge failed, the bank would have no liability to make the coupon payments but, as the case was continuing, the bank wanted directions from the court as the coupon payments were due on Saturday. The bank was prepared to consider paying the relevant sum into an escrow account, he added.

The application arose in the continuing challenge by a Cayman Islands investment firm representing some junior bondholders in AIB to an order secured by the Minister for Finance from the High Court last April.