SC extends stay on order quashing write-off of Yes Bank's AT1 bonds

The Supreme Court on Friday issued notice to Axis Trustee Services Ltd on a clutch of appeals filed by the RBI and others against the Bombay High Court order, which quashed a decision of the Yes Bank administrator to write off Additional Tier 1 (AT-1) bonds.

Solicitor General Tushar Mehta, representing the RBI, and senior advocate Kapil Sibal, representing Yes Bank, made submissions before a bench headed by Chief Justice D.Y. Chandrachud.

After hearing their submissions, the bench, also comprising P.S. Narasimha and J.B. Pardiwala, extended a stay on the high court order quashing the decision of writing off AT-1 bonds.

The bench said: "Issue notice. The stay granted (by the Bombay High Court on its decision) will continue."

The apex court was hearing the appeal by Yes Bank, RBI, and others against a Bombay High Court ruling, which set aside an administrator's decision to write off Rs 84.5 billion of AT-1 bonds in March 2020 after the RBI initiated a restructuring of the lender.

The high court, while quashing the decision of the Yes Bank Administrator, had, however, said its decision will be in abeyance so the RBI and Yes Bank may appeal against it in the Supreme Court.

AT-1 bonds have no maturity date. These debt instruments offer higher returns but also carry greater risk.

The bench asked the parties to file a list of dates and a common compilation of records and case laws for expeditious disposal of the matter. The top court scheduled the matter for further hearing after Holi break in March.

In January, the high court had quashed the decision of the Yes Bank on March 14, 2020 to write off the bonds. The high court noted that the administrator did not have the authority to take such a decision. Yes Bank had written off AT-1 bonds worth Rs 8,415 crore as part of the bailout in March 2020.

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