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Its
bankruptcy restructuring has made provision for the creation of
a trust to pursue litigation against the U.S. Federal Deposit
Insurance Corporation which seized $1.9 billion from SVB
Financial's bank accounts during Silicon Valley Bank's 2023
collapse - one of the largest in U.S. banking history.
The battle over the seized funds will play out in a California
federal court.
SVB Financial has argued the cash should be returned because the
FDIC had invoked a "systemic risk" exemption to protect all
deposits at Silicon Valley Bank, including accounts with more
than the $250,000 that the FDIC typically protects.
The FDIC has countered that it did not intend to protect the
bank accounts of the parent company, saying the money was
legally seized to offset its costs in rescuing the bank.
Depending on the outcome of the litigation, SVB Financial's
senior bondholders who are owed $3.3 billion, will be paid
between 41% and 96% of what they are owed.
The bondholders include MFN Partners, Pacific Investment
Management Company, Bank of America Securities, JP Morgan
Securities, and King Street Capital, according to court
documents.
As part of its bankruptcy restructuring, SVB Financial has also
sold assets, spinning off its venture capital business and
investment banking unit.
(Reporting by Dietrich Knauth; Editing by Alexia Garamfalvi and
Edwina Gibbs)
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