Private sector lender Yes Bank has approached the Supreme Court challenging the Bombay High Court’s decision to write-off additional tier-1 (AT-1) bonds.
AT-1 bonds worth Rs 8,400 crore were written off in March 2020 as part of the restructuring plan to save the bank and provide relief to investors.
The commercial bank has now challenged the January 20 order of the Bombay High Court.
Equity holders, on the other hand, did not face similar write-downs, however, as 75% of their shares were subject to a lock-in for three years.
The Reserve Bank of India (RBI) had directed the administrator of Yes Bank to write down these bonds, as part of a restructuring plan led by State Bank of India to save the lender from collapse.
In its defence, Yes Bank has argued that its administrator, who was appointed by the central bank, had the power to completely write off AT-1 bonds amounting to Rs 8,415 crore on March 14, 2020.
The Bombay High Court had last month said that there were procedural lapses in Yes Bank’s decision to write down the bonds. It did not go into the merits and demerits of the nature of these bonds.
However, the court in its judgment offered relief to bondholders with an exposure of Rs 8,450 crore in these bonds.
The court ruled that the administrator appointed by the RBI does not have the power to decide to write off the bonds. The court said it was not part of the final restructuring plan.
“It appears that the Administrator exceeded his powers and authority in writing off the AT-1 bonds following the reconstruction of the bank on March 13,” the court ruled.
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