Bankruptcy Approved for Former Owner of Silicon Valley Bank Collapse
A federal judge has authorized the bankruptcy proceedings for SVB Financial Group, the former parent company of the collapsed Silicon Valley Bank.
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Important Highlights
- A federal judge approved the bankruptcy for SVB Financial Group, the former owner of the failed Silicon Valley Bank.
- Judge Martin Glenn sided with the FDIC by declining SVB Financial Group's request to reclaim $1.93 billion in deposits seized during the bank's collapse.
- In March 2023, the FDIC assumed control of Silicon Valley Bank following a swift withdrawal of deposits.
The previous owner of Silicon Valley Bank, whose collapse sparked a regional banking crisis last year, has been granted federal court approval to conclude its bankruptcy process.
SVB Financial Group is now authorized to distribute its assets to creditors, following Judge Martin Glenn's ruling in the Southern District of New York Bankruptcy Court on Friday.
Ongoing Legal Battle Between SVB and FDIC
Meanwhile, a legal dispute remains unresolved as SVB Financial Group pursues a lawsuit against the Federal Deposit Insurance Corporation (FDIC) regarding $1.93 billion seized from SVB’s accounts after the bank's failure. SVB argues the funds, originating from three separate accounts, should be returned. However, Judge Glenn ruled that this matter should be handled in a different court case filed in Northern California, supporting the FDIC's position.
Silicon Valley Bank, which primarily served California's tech sector, faced a sudden surge of withdrawals in March 2023, triggering its downfall. This event marked the first in a series of bank failures that prompted new federal regulations targeting regional banks. After the FDIC's takeover, Silicon Valley Bank was sold to First Citizens BancShares’ subsidiary, First Citizens Bank.
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