Chapter 11 Proceedings & SVB's Current Situation
Attorney James Bromley reassured that SVB Financial, which has approximately $180 million available, is not in immediate danger of running out of funds during the Chapter 11 bankruptcy proceedings overseen by U.S. Bankruptcy Judge Martin Glenn in Manhattan.
SVB Financial's Bankruptcy Filing Background
SVB Financial filed for Chapter 11 bankruptcy on March 17, following California regulators' closure of Silicon Valley Bank in early March. The FDIC was appointed receiver, marking the largest collapse since Washington Mutual in 2008. SVB Financial replaced its CEO and CFO with turnaround specialists last week.
Considering Bankruptcy Loan amid FDIC Uncertainty
The company may need a bankruptcy loan due to the FDIC's unclear stance on returning any of the $2 billion seized during the bank failure. Bromley stated that the FDIC had not fully justified the cash seizure.
FDIC's Justification for Cash Seizure
Derek Baker, FDIC's attorney, informed Judge Glenn that SVB Financial's bank accounts were lawfully seized as part of the FDIC's takeover. The cash is being held against the regulator's costs in protecting SVB customer deposits, and the FDIC is working to provide more details about its claims against SVB Financial.
Judge Glenn's Request for More Information
Judge Glenn requested more information about the FDIC's authority to seize cash and the resolution of related disputes. He instructed Baker to report back to the court on these topics within a week.
SVB Financial Awaits Seized Financial Records
SVB Financial is still awaiting the complete return of financial records seized during the bank takeover. First Citizens BancShares, the buyer of the failed bank, has hired a specialized financial adviser to expedite the transfer of necessary information for SVB Financial's bankruptcy case.