SVB Financial said that unless the FDIC returned the funds, it might have to seek external financing to pay for the case. Reuters
SVB Financial said that unless the FDIC returned the funds, it might have to seek external financing to pay for the case. Reuters
SVB Financial said that unless the FDIC returned the funds, it might have to seek external financing to pay for the case. Reuters
SVB Financial said that unless the FDIC returned the funds, it might have to seek external financing to pay for the case. Reuters

SVB Financial sues US regulator to recover $1.93bn seized in March


  • English
  • Arabic

SVB Financial Group is suing the US Federal Deposit Insurance Corporation (FDIC) as it looks to recover $1.93 billion seized by the regulator when it took over the failed Silicon Valley Bank in March.

SVB Financial said the FDIC asserted it has claims against the company to justify its refusal to pay but has not identified a single claim “despite having numerous opportunities”, media reports cited filing in a bankruptcy court on Sunday.

The company said the FDIC violated bankruptcy rules by transferring funds and refusing to honour SVB Financials’ demand to be paid, Reuters reported. The FDIC did not immediately respond to Reuters' request for comment.

The company filed for bankruptcy in March after Silicon Valley Bank became the ward of the FDIC following a $42 bank run.

The holding company has bonds and preferred stock outstanding with a face value of $7 billion that are now largely held by various distressed-asset investors.

Ownership of the cash has been a central issue since the opening bankruptcy court hearing, in which one lawyer for SVB Financial accused the FDIC of having “drained” the $1.9 amount, according to a Financial Times report.

The cash balance, which is held in an account at its banking subsidiary, is described as “the most significant asset” of the SVB Financial estate, the FT said, citing the lawsuit filed in a New York federal bankruptcy court.

SVB Financial said that unless the FDIC returned the funds, it might have to seek external financing to pay for the case, a process which it described as potentially “costly and uncertain”.

“The Debtor’s lack of access to these Account Funds is impeding its ability to reorganise and causing harm to the Debtor on a continuous basis,” SVB Financial wrote in its lawsuit.

The holding company SVB Financial said that after the US Treasury Department invoked the so-called systemic risk exception to make it legal for the FDIC to insure Silicon Valley Bank deposits greater than $100,000, the parent company was entitled to access its cash on deposit at the seized banking subsidiary.

The FDIC in previous court appearances and court papers argued that it might have so-called offset rights to claim the parent company’s cash to satisfy potential liabilities.

At issue between the two sides is who in the interim gets to possess the cash, leaving one party to submit a claim to the other over what portion it believes must be rightfully handed back, the FT report said.

SVB Financial, the parent company of Silicon Valley Bank before it was seized, is attempting to sell its remaining assets in bankruptcy.

Last week, a US bankruptcy judge allowed the company to sell its investment banking business to a group led by the division’s former chief executive, Jeff Leerink and is backed by funds managed by the Baupost Group.

The deal includes an equity financing of up to $100 million from Baupost along with a $30 million financing commitment from Mr Leerink's team, Reuters cited a court filing as saying at the time.

SUCCESSION%20SEASON%204%20EPISODE%201
%3Cp%3E%3Cstrong%3ECreated%20by%3A%20%3C%2Fstrong%3EJesse%20Armstrong%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStars%3A%3C%2Fstrong%3E%20Brian%20Cox%2C%20Jeremy%20Strong%2C%20Kieran%20Culkin%2C%20Sarah%20Snook%2C%20Nicholas%20Braun%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%204%2F5%3C%2Fp%3E%0A
Sole survivors
  • Cecelia Crocker was on board Northwest Airlines Flight 255 in 1987 when it crashed in Detroit, killing 154 people, including her parents and brother. The plane had hit a light pole on take off
  • George Lamson Jr, from Minnesota, was on a Galaxy Airlines flight that crashed in Reno in 1985, killing 68 people. His entire seat was launched out of the plane
  • Bahia Bakari, then 12, survived when a Yemenia Airways flight crashed near the Comoros in 2009, killing 152. She was found clinging to wreckage after floating in the ocean for 13 hours.
  • Jim Polehinke was the co-pilot and sole survivor of a 2006 Comair flight that crashed in Lexington, Kentucky, killing 49.
The Settlers

Director: Louis Theroux

Starring: Daniella Weiss, Ari Abramowitz

Rating: 5/5

In numbers: China in Dubai

The number of Chinese people living in Dubai: An estimated 200,000

Number of Chinese people in International City: Almost 50,000

Daily visitors to Dragon Mart in 2018/19: 120,000

Daily visitors to Dragon Mart in 2010: 20,000

Percentage increase in visitors in eight years: 500 per cent

The specs

Engine: 2.0-litre 4-cylturbo

Transmission: seven-speed DSG automatic

Power: 242bhp

Torque: 370Nm

Price: Dh136,814

Updated: July 10, 2023, 7:12 AM`