Stories
Supreme Court Upholds Bombay High Court Order Quashing Yes Bank AT-1 Bond Write-Off
- •The Supreme Court dismissed appeals challenging the Bombay High Court ruling that set aside Yes Bank's permanent write-off of AT-1 bonds worth Rs 8,415 crore.
- •The High Court found that the bank's Administrator lacked the authority to write off the bonds after the final Yes Bank Reconstruction Scheme came into force on March 13, 2020.
- •The final reconstruction scheme deliberately omitted the write-off provision that was present in the draft version, rendering the Administrator's subsequent action invalid.
- •Bondholders and trustees successfully argued that contractual loss-absorption clauses could not override the terms of the final government-notified reconstruction scheme.
Key Questions Answered
The Supreme Court dismissed appeals and declined to overturn a Bombay High Court judgment that set aside Yes Bank's permanent write-off of AT-1 bonds worth Rs 8,415 crore. This ruling maintains the relief granted to the bondholders.
The Bombay High Court held that Yes Bank was reconstructed when the Union government notified the final scheme on March 13, 2020, which deliberately omitted the write-off provision. Because the final scheme did not authorize it, the bank's Administrator lacked the authority to write off the bonds the following day.
The write-off communication covered two specific AT-1 bond issuances: Rs 3,000 crore raised on December 23, 2016, and Rs 5,415 crore issued on October 18, 2017. Both sets of Basel III-compliant instruments were permanently extinguished following the RBI's intervention.
