COMPANY ANNOUNCEMENT:Anglo Irish Bank Corp plc has until the end of today to tell a US judge why it should not have to pay off $200 million of bonds before it sells $10.3 billion worth of loans on US commercial property.

US District Court judge Paul Gardephe yesterday ordered the failed bank to explain if it planned to merge with Irish National Building Society and sell its US portfolio of loans, court documents showed.

Sources familiar with the matter have said that the bank has engaged real estate investment banking company, Eastdil Secured, to sell the portfolio.

A representative for Fir Tree declined to comment. Lawyers for Anglo Irish Bank could not be reached for comment.

In February, funds run by US hedge fund Fir Tree Partners filed a lawsuit in federal court to prevent Anglo Irish from merging with a suitor or selling off assets before it repaid the $200 million in notes.

Anglo Irish, which has been taken over by the Irish Government, has argued that it is a sovereign nation and cannot be sued.

Fir Tree has said that the bank sold those notes under New York commercial law and was therefore operating as a commercial entity and so it must adhere to the notes’ covenants.

If the judge agrees with Fir Tree, he can then decide whether to grant an injunction. An injunction could prevent the loan sale until the $200 million was paid, or require the new owner or owners to assume the payment.

On March 15th, Jim Bradley, Anglo Irish’s head of Financial Markets, said the bank had no plans at that time to sell its US assets and nor was he aware at that time of merger plans, according to court documents.

Since then, the Irish Government, which has taken over many of its failed banks and lenders, has said that it planned to merge Anglo Irish and the Irish National Building Society.