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SVB Financial Group (OTC:SIVBQ), the former parent company of failed Silicon Valley Bank, received permission from a U.S. judge on Friday to distribute its assets to its creditors and close its bankruptcy, Reuters reported.
According to the report, the bankruptcy plan includes: Provides for the establishment of a fund to pursue lawsuits against the US Federal Deposit Insurance Corporation, which seized $1.9 billion from SVB Financial (OTC:SIVBQ) Accounts after the bank collapse in 2023.
In March 2023, SVB became the largest U.S. bank to fail since the collapse of Lehman Brothers in 2008, which sparked a global banking crisis. Shortly after SVB’s bankruptcy, Signature Bank (OTC:SBNY) collapsed and Credit Suisse was bailed out by UBS (UBS).
The report said the battle over the seized funds will take place in federal court in California.
SVB Financial (OTC:SIVBQ) has sought its money back, noting that the FDIC used a “systemic risk” exemption to protect all deposits within the Silicon Valley bank, including accounts over $250,000 that the FDIC typically protects, the report said.
The reports added that the Federal Deposit Insurance Corporation said it did not intend to protect the parent company’s bank accounts, and that it had legally seized the funds to offset the costs of rescuing the bank.
According to the report, SVB Financial’s senior bondholders, who are owed $3.3 billion, will receive between 41% and 96% of what they are owed, depending on the outcome of the litigation.
The bondholders include MFN Partners, Pacific Investment Management Company, Bank of America Securities, JP Morgan Securities and King Street Capital, the report said, citing court documents.