The fate of Allied Irish Bank’s (AIB) junior bondholders is being decided this week following a hedge fund’s challenge to Ireland’s court-ordered burden sharing scheme. If the case fails, it could pave the way for similar orders in other troubled European countries. The Irish High Court will on Tuesday begin hearing New York-based Aurelius Capital Management LP’s challenge a subordinated liability order (SLO) issued by Irish finance minister Michael Noonan in mid-April. The SLO issued by the Irish government in April imposed losses of between 75% and 90% on the €2.6 billion ($3.79 billion) of subordinated debt issued by AIB. The order extends the maturity dates to 2035 and restricts interest payments, and removes AIB from restrictions on “payment of any distribution or dividend on any other specified junior or parity securities of AIB, or (ii) any repurchase or redemption of such junior or parity securities”. In addition, the order...