One of two plaintiffs opposing Irish government plans to make junior bondholders in Allied Irish Banks bear losses of up to 90 percent withdrew its challenge from the Irish High Court on Friday.
Abadi Co said it had withdrawn its challenge because it feared it would miss a June 13 deadline that could trigger a writedown of over 99 percent of its bonds' values and said it had been treated unfairly.
Dublin is hoping to cut around 5 billion euros from a 70 billion euro bill for bailing out its banking sector by imposing losses on junior bonds in Allied Irish (AIB), Bank of Ireland, Irish Life & Permanent and EBS Building Society.
The two bondholders took the case against the government after it got a court order on April 14 to force losses onto owners of AIB's subordinated debt. The government subsequently launched the buyback plans on May 13.
"By issuing the coercive (liability management exercise) with a deadline of acceptance in the middle of the trial and by delaying various aspects of its case, the Minister was effectively denying access to justice in the initial proceedings," Abadi said in a statement.