Key Takeaways
- A federal judge signed off on the bankruptcy of the former owner of the failed Silicon Valley Bank, SVB Financial Group.
- However, Judge Martin Glenn agreed with the FDIC as it rejected claims by SVB Financial Group that regulators should return $1.93 billion in deposits seized when the bank collapsed.
- The FDIC took over Silicon Valley Bank in March 2023 after the bank was hit a run on deposits.
The former owner of the now-defunct Silicon Valley Bank, whose failure helped trigger a regional bank crisis last year, has received permission from a federal judge to end its bankruptcy.
SVB Financial Group can now turn over its assets to creditors, following a ruling by Judge Martin Glenn in the Bankruptcy Court for the Southern District of New York Friday.
SVB Lawsuit Against FDIC Still Unresolved
However, still in limbo is a lawsuit filed by SVB against the Federal Deposit Insurance Corporation (FDIC) over the $1.93 billion seized by regulators from SVB’s bank accounts after they took over Silicon Valley Bank when it collapsed early last year. SVB has argued that the money, which came from three accounts, should be returned. However, Judge Glenn sided with the FDIC in arguing that the decision should be made in a separate court case, which was filed in Northern California.
Silicon Valley Bank, which catered to the tech industry in California, ran into trouble when it was hit by a rush of depositors to withdraw their money in March 2023. It was the first of several failures that rippled through the industry, which led to new federal regulations for regional banks. Following the takeover, the FDIC sold Silicon Valley to First Citizens BancShares (FCNCA) subsidiary First Citizens Bank.