SVB Financial Group Aims to Recover $1.9 Billion from FDIC
The parent firm of Silicon Valley Bank or the SVB Financial Group claims it is owed $1.9 billion by the nation’s banking regulator.
To that aim, SVB Financial Group sued the Federal Deposit Insurance Corporation (FDIC) on July 9 in an effort to recoup the money that the regulator has been holding since seizing Silicon Valley Bank earlier this year.
Days after the FDIC seized Silicon Valley Bank, which failed due to a run on deposits, SVB Financial Group filed for bankruptcy. The FDIC is allegedly breaking the terms of the US bankruptcy code by holding onto its funds, according to SVB Financial Group.
The business claimed in its lawsuit that the ongoing infractions were seriously hurting the debtor. The debtor’s inability to access these Account Funds is hindering its capacity to reorganize and harming the debtor continuously. “The $1.93 billion in Account Funds is the core estate asset.”
In order to develop a strategy that “maximizes the value of the Debtor’s tax attributes,” SVB Financial Group contends that it must have “immediate receipt” of the money. It also asserts that the funds should be producing more than $100 million in interest annually.
The FDIC has been contacted by for any comments against the lawsuit filed by the SVB Financial Group but did not respond yet.
Days prior, a bankruptcy judge had authorized the sale of SVB Securities, the investment bank owned by SVB Financial Group, to its managers for $100 million.
These depositors, many of which are venture capital (VC) funds in Hong Kong and China, sought legal recourse because they were left with nothing after the bank failed and were not protected by a deposit guarantee program like that offered by the FDIC.
In the meantime, news emerged last month that the federal government was looking into the role that financial behemoth Goldman Sachs had in the demise of Silicon Valley Bank.
The Federal Reserve and the Securities and Exchange Commission (SEC) are looking into the banking behemoth’s participation in purchasing the securities portfolio of Silicon Valley Bank while also attempting to raise money for the lender before to its demise.