SC Strikes Down Yes Bank's At1bond Write-Off

to quash Yes Bank's write-off of Additional Tier 1 (AT1) bonds worth
₹8,415 crore during the bank's restructuring in March 2020.

Following the verdict Yes Bank’s shares closed 14.43 per cent lower at
Rs 18.15 per scrip for the day.

The lender told the exchanges that it
was examining the Supreme Court judgement and would make further
disclosures as required.
According to legal experts, its remains to be seen if Yes Bank resorts
to raising additional capital or if its new investor Sumitomo Mitsui
Banking Corporation (SMBC) that acquired 20 per cent stake in the
lender provides any support to the Bank in meeting the ₹ 8415 crore
obligation to AT1 bondholders. The lender will be announcing its
Q2FY27 financial results on Saturday.
A Bench of Justices Dipankar Datta and AG Masih dismissed appeals
filed by Yes Bank, the Reserve Bank of India (RBI) and the Centre
challenging the high court's January 2023 judgment.
“We see no reason to interfere with the impugned judgment,” the
Supreme Court said while pronouncing its verdict.
The dispute began in March 2020 when Yes Bank wrote down AT-1 bonds
worth ₹8,415 crore to zero as part of its rescue and reconstruction
strategy. The decision wiped out the investments of bondholders,
represented by Axis Trustee Services, who challenged the decision
before the Bombay High Court.
The petitioners argued that the administrator had no authority to
extinguish their investments after the reconstruction scheme came into
force. While the draft reconstruction scheme contained a provision for
writing down AT1 bonds, this provision was deleted from the final
scheme sanctioned by the Central government.
The high court had quashed the write-off in an order in January 2023,
saying the private lender’s final reconstruction scheme did not
contain a provision authorising it.