An investment firm opposing Finance Minister Michael Noonan's bid to achieve some burden sharing by subordinated bondholders in AIB has claimed before the Commercial Court that his move is based on "choice, not necessity".
British Virgin Islands-registered Abadi & Co Securities has, with Aurelius Capital Master and linked firms in a Cayman Islands-registered investment fund, sought a range of documents for their legal challenges to Mr Noonan's move.
The documents sought include a report by international asset management company BlackRock Solutions and other documents that led to the Central Bank re-calculating AIB's recapitalisation requirements at €13.3bn, up from an initial figure of €4.2bn.
Lawyers for the Finance Minister are opposed to the handover of those and certain other documents and claim they are neither necessary nor relevant for the proper determination of the legal issues in the case.
A "trawl" through material that the Central Bank had considered was not envisaged under the provision of the Credit Institutions (Stabilisation) Act permitting challenges to orders such as that which was obtained by Mr Noonan, David Barniville SC said.
It was not open to the Finance Minister to seek to interrogate the conclusions of the Central Bank concerning the capital requirements of AIB, David Barniville SC argued.
The issue was whether Mr Noonan's opinion as to the necessity of the order sought by him was sound and he had no reasonable grounds to question the €13.3bn recapitalisation figure arrived at by the Central Bank. The focus of the court would be on the Finance Minister's opinion, not the opinions of others.
Lawyers for the Finance Minister are also seeking orders requiring the companies to discover documents in advance of the legal challenge, to be heard on June 2 by Mr Justice John Cooke.
The hearing of the discovery applications opened yesterday before the judge and are expected to conclude today.
The companies are challenging a Subordinated Liabilities Order (SLO) secured from the High Court by Mr Noonan last month in an application under the Credit Institutions (Stabilisation) Act.
The SLO provided for the Government to engage in a Liability Management Exercise (LME) involving buying back debt from junior bondholders in AIB at a significant discount.