Investors have received respite as Yes Bank allegedly appealed the Bombay High Court's decision to write off Additional Tier-1 (AT-1) bonds issued by the private lender and valued at ₹8,400 crore. The bank has appealed a Bombay High Court judgement from January 20 to the Supreme Court.
In March 2020, Yes Bank was saved by a reorganisation that included writing down the AT-1 bonds. While equity holders did not see a comparable write-down, 75% of their shares were locked for three years.
In order to prevent the Yes Bank lender from going down, the Reserve Bank of India had instructed the administrator to write off these bonds as part of a restructuring plan under the direction of the State Bank of India.
According to a BQ Prime report, Yes Bank has contended that its administrator, chosen by the central bank, had the authority to fully write down AT-1 bonds worth ₹8,415 crore on March 14, 2020.
The Bombay High Court last month decided that there were procedural errors in the decision to write down the bonds without delving into the merits of the bonds' nature.
However, the court granted relief to bondholders who had an exposure to these bonds of ₹8,450 crore.
According to the court, the administrator lacked the authority to write off the bonds because it was not included in the final restructuring plan.
It appears that the administrator overstepped his bounds by writing off AT-1.
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