Supreme Court says NO to Yes Bank: Lender now seeks review on ₹84 billion write-off

In a turn of events, Yes Bank has filed a petition seeking the Supreme Court to review a court petition setting aside the ₹84 billion write-off of its additional tier-1 (AT-1) bonds. This week, Axis Trustee Services filed a contempt petition with India’s apex court on behalf of bondholders, accusing Yes Bank of failing to provide a definitive "roadmap" to restore bonds and implement the court’s judgment. 

What are AT-1 bonds? They are debt instruments with high returns, but they also carry higher risk since they could be written off or transformed into equity if a lender comes under financial pressure.  

Earlier, the Bombay High Court had set aside the AT-1 bond write-off, and in October, the Supreme Court upheld the HC ruling. It stemmed from Japan's Sumitomo Mitsui Banking Corp, which held 24 per cent stake in Yes Bank, being declared insolvent six years ago. When new investors were brought in, AT-1 bonds were written off as part of the restructuring scheme, according to Reuters.

But the court maintained that Yes Bank administrator gave an "erroneous impression" that he held the authority to write down bonds after the restructuring scheme was finalised. This led to the court ruling that the write-off was "impermissible".

[With inputs from agencies]