The legal dispute surrounding Yes Bank's Additional Tier 1 (AT1) bond write-off has escalated to the Supreme Court of India. This controversy originated in March 2020 when the Reserve Bank of India (RBI) imposed a moratorium on Yes Bank due to increasing bad loans and governance issues. The bank was subsequently rescued through a reconstruction scheme, which involved writing down AT1 bonds worth approximately ₹8,400 crore to zero, effectively erasing investor holdings. In contrast, equity shareholders were spared a similar fate but had 75% of their shares locked in for three years. AT1 bonds are designed as loss-absorbing instruments that rank above equity but below other debts, intended to bolster banks' core capital under Basel III norms. Following the write-off, bondholders initiated multiple legal challenges. The Supreme Court is now reviewing a Bombay High Court ruling that deemed the RBI-appointed administrator had overstepped his authority by extinguishing the bonds. Yes Bank, along with the RBI and the government, is contesting this ruling. The outcome of this case could set significant precedents for future AT1 bond treatments, especially considering international examples like the $17 billion write-down of Credit Suisse's AT1 bonds in March 2023.