SVB Financial fights FDIC over seized tax
refunds
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[May 12, 2023]
By Dietrich Knauth
NEW YORK (Reuters) - SVB Financial, the bankrupt former parent of failed
Silicon Valley Bank, said on Thursday the U.S. Federal Deposit Insurance
Corporation must release $10 million in tax refund checks owed to the
company, escalating a dispute over the agency's efforts to seize assets
in the wake of the bank's collapse. |
![](../images/051123PIX/busine84.jpg)
Destroyed SVB (Silicon Valley Bank) logo is
seen in this illustration taken March 13, 2023. REUTERS/Dado
Ruvic/Illustration |
The FDIC had previously asked the bankruptcy court judge
overseeing the case to create an escrow account to hold all of
the tax refunds while the regulator determines whether they
properly belong to the seized bank or SVB Financial.
SVB Financial said in a Thursday court filing in Manhattan that
the FDIC acted before waiting for a court order, intercepting
five checks totaling $10 million and laying claim to $219
million in tax refunds expected to come from federal, state and
local governments.
SVB Financial urged the court to stop the FDIC from interfering
with its property rights, saying its "ham-fisted
authoritarianism should not be allowed to continue."
The FDIC declined to comment.
The FDIC took over Silicon Valley Bank on March 10 after
depositors rushed to pull out their money in a bank run that
also brought down Signature Bank and wiped out more than half
the market value of several other U.S. regional lenders.
During the takeover, the FDIC also seized about $2 billion from
SVB Financial's own accounts at the bank, a move that has slowed
SVB Financial's progress in a bankruptcy proceeding to sell
remaining assets like its venture capital investments.
SVB Financial said it may be forced to take out a bankruptcy
loan "at great expense" because it lacks sufficient cash for an
orderly sale of its assets.
The FDIC has said it is legally able to hold the seized funds
while it determines how much SVB Financial should contribute to
the bank takeover costs. The FDIC on Thursday estimated that the
bank failure caused a $16 billion hit to its insurance fund.
SVB Financial argued that the FDIC cannot be allowed to seize
assets without laying out exactly what it believes SVB Financial
owes and why.
(Reporting by Dietrich Knauth, Editing by Alexia Garamfalvi and
Richard Chang)
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