India court docket quashes write-off of Sure Financial institution’s AT1 bonds -legal sources

MUMBAI, Jan 20 (Reuters) – The Bombay Excessive Courtroom, in an oral pronouncement on Friday, quashed the write-off of extra Tier-1 (AT1) bonds issued by Sure Financial institution Ltd (YESB.NS), stated authorized sources with direct data of the matter.

The ultimate order is but to be uploaded on the court docket web site and the financial institution can select to attraction in Supreme Courtroom.

The bonds had been written off as a part of a restructuring plan to rescue Sure Financial institution in March 2020. Fairness holders, then again, didn’t face an identical write-down, however 75% of their shares had been topic to a lock-in for 3 years.

Further Tier-1 bonds are high-yield securities that usually have loss-absorbing options, which means they are often written down if a lender’s capital falls beneath an important stage.

This function was invoked within the case of Sure Financial institution.

Nevertheless, the court docket supplied reduction to bondholders with publicity of 84.5 billion rupees ($1.04 billion) to those bonds.

Particular person and institutional bondholders had filed a number of petitions within the Courtroom, arguing that the bonds had been mis-sold and couldn’t be written off when fairness was not.

“The Bombay Excessive Courtroom had allowed the bondholders’ petition towards the write-off and the choice to write down off the AT1 bonds has been quashed,” stated Srijan Sinha, an advocate who appeared on behalf of the affiliation of particular person bondholders.

“The Courtroom has granted Sure Financial institution 6 weeks to implement the order,” stated Sinha.

Sure Financial institution didn’t instantly provide feedback on the order. An e-mail despatched to RBI was not answered instantly.
($1 = 81.1310 Indian rupees)

Reporting by Jayshree P Upadhyay; Modifying by Savio D’Souza

Our Requirements: The Thomson Reuters Belief Ideas.