SVB Financial Group, the parent of the now-collapsed Silicon Valley Bank, brought a lawsuit against US Federal Deposit Insurance Corporation (FDIC) to recover $1.93 billion, which the regulator seized during the takeover of the failed bank.
SVB Financial Group Seeks Access to Blocked Cash
According to the court filing on Sunday, the lawsuit came after the regulator asserted its claims against SVB Financial Group for refusal of the payment. The company blamed the regulator for not identifying even a single claim “despite having numerous opportunities.”
The lawsuit highlighted that the regulator violated the bankruptcy rules by transferring the funds and refusing to pay the claims.
The FIDC took over the Silicon Valley Bank last March as the bank failed. However, to mitigate the situation, the US federal government jumped in to guarantee the deposits of all depositors even beyond the FIDC-insured sums. The bank was declared bankrupt.
The bankruptcy process led to the holding of the company’s bonds and preferred stock outstanding with a face value of $7 billion held by several distressed-asset investors. The holding of the cash also raised a lot of controversy as one lawyer representing the SVB Financial Group earlier said that the FIDC illegally “drained” $1.9 billion, which was labelled as “the most significant asset” of the estate.
The Company Needs the Cash
SVB Financial is arguing that it is entitled to access the cash held at the account of its subsidiary, as the US Treasury Department invoked the systemic risk exception, which allowed the FIDC to insure the bank deposits of more than $100,000, Financial Times noted. In previous court filings, SVB Financial asked for access to the funds to pay off its liabilities.
“The Debtor’s lack of access to these Account Funds is impeding its ability to reorganize and causing harm to the Debtor on a continuous basis,” SVB Financial noted in the latest lawsuit, highlighting that if the FIDC does not return the cash, the company might have to seek external financing to continue with the legal fight.
Last month, SVB Financial sold its investment banking division to a buyout group led by Jeffrey Leerink for about $80 million, Finance Magnates reported.
SVB Financial Group, the parent of the now-collapsed Silicon Valley Bank, brought a lawsuit against US Federal Deposit Insurance Corporation (FDIC) to recover $1.93 billion, which the regulator seized during the takeover of the failed bank.
SVB Financial Group Seeks Access to Blocked Cash
According to the court filing on Sunday, the lawsuit came after the regulator asserted its claims against SVB Financial Group for refusal of the payment. The company blamed the regulator for not identifying even a single claim “despite having numerous opportunities.”
The lawsuit highlighted that the regulator violated the bankruptcy rules by transferring the funds and refusing to pay the claims.
The FIDC took over the Silicon Valley Bank last March as the bank failed. However, to mitigate the situation, the US federal government jumped in to guarantee the deposits of all depositors even beyond the FIDC-insured sums. The bank was declared bankrupt.
The bankruptcy process led to the holding of the company’s bonds and preferred stock outstanding with a face value of $7 billion held by several distressed-asset investors. The holding of the cash also raised a lot of controversy as one lawyer representing the SVB Financial Group earlier said that the FIDC illegally “drained” $1.9 billion, which was labelled as “the most significant asset” of the estate.
The Company Needs the Cash
SVB Financial is arguing that it is entitled to access the cash held at the account of its subsidiary, as the US Treasury Department invoked the systemic risk exception, which allowed the FIDC to insure the bank deposits of more than $100,000, Financial Times noted. In previous court filings, SVB Financial asked for access to the funds to pay off its liabilities.
“The Debtor’s lack of access to these Account Funds is impeding its ability to reorganize and causing harm to the Debtor on a continuous basis,” SVB Financial noted in the latest lawsuit, highlighting that if the FIDC does not return the cash, the company might have to seek external financing to continue with the legal fight.
Last month, SVB Financial sold its investment banking division to a buyout group led by Jeffrey Leerink for about $80 million, Finance Magnates reported.
