Yes Bank AT-1 bond review proceedings have moved to the Supreme Court as the private lender challenges a high-stakes judicial ruling. India’s Yes Bank on Friday announced that it has filed a petition in the country’s apex court seeking a review of the court judgment that set aside the write-off of ₹8,415 crore ($893.81 million) of its additional tier-1 bonds.
The legal development follows actions taken by trustee representatives on behalf of the investors holding these high-risk debt instruments. Axis Trustee Services, acting on behalf of the bondholders, recently filed a contempt petition in the Supreme Court alleging the lender failed to provide a concrete roadmap for restoring the bonds and implementing the court’s earlier judgment.
Last month, the Supreme Court dealt a blow to Yes Bank by upholding a Bombay High Court ruling setting aside the write-off of its AT-1 bonds. The lender, in which Japan’s Sumitomo Mitsui Banking Corporation now holds a 24% stake, was declared insolvent six years ago before new investors were brought in under a restructuring scheme and its AT-1 bonds were written off.
Key Points Of The Yes Bank AT-1 Bond Review
- Yes Bank has approached the Supreme Court seeking a review of its judgment overturning the ₹8,415-crore AT-1 bond write-off.
- Axis Trustee Services filed a contempt petition alleging the lender failed to provide a roadmap for restoring the bonds.
- The Supreme Court previously upheld a Bombay High Court ruling that declared the write-off impermissible.
- The bank’s administrator previously acted under the impression that he retained the power to write down the bonds after the finalisation of the restructuring scheme.
Why Yes Bank Challenged The AT-1 Bond Ruling
In its October order, the Supreme Court stated that the bank’s administrator had acted under the erroneous impression that he retained the power to write down the bonds after the restructuring scheme was finalised. The apex court ruled that the write-off was impermissible under the legal framework. Following that ruling, Reuters reported that Yes Bank was unlikely to pay coupons due on the AT-1 bonds this year and planned to seek a review of the decision.
Additional tier-1 bonds are high-risk debt instruments offering higher returns to investors. However, these financial instruments carry the specific condition that they can be written off or converted into equity when a bank comes under severe financial stress. The ongoing judicial review will determine the final legal status of the disputed write-off.
Frequently Asked Questions
What is the Yes Bank AT-1 bond review about?
Yes Bank has filed a petition in the Supreme Court seeking a review of the court judgment that set aside the write-off of ₹8,415 crore of its additional tier-1 bonds following an earlier Bombay High Court ruling.
Who filed the contempt petition against Yes Bank?
Axis Trustee Services, acting on behalf of the bondholders, filed a contempt petition in the Supreme Court alleging that Yes Bank failed to provide a concrete roadmap for restoring the AT-1 bonds and implementing the
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