SVB Financial Group, the former parent company of failed Silicon Valley Bank, is burning through cash while it struggles to gain access to records it says are necessary to move forward in bankruptcy.
(Bloomberg) — SVB Financial Group, the former parent company of failed Silicon Valley Bank, is burning through cash while it struggles to gain access to records it says are necessary to move forward in bankruptcy.
The firm is sparring with the Federal Deposit Insurance Corp. over access to those records — things like minutes from board meetings — as well as $2 billion the agency seized after the bank failed in March.
“There’s a category of material that the FDIC claims to have some rights over which the debtor also believes is its property,” Jim Bromley, an attorney representing SVB Financial, said during a bankruptcy hearing on Wednesday. First Citizens Bank’s purchase of SVB’s banking operations last month has complicated negotiations, he said.
US Bankruptcy Judge Martin Glenn expressed repeated concern over the slow pace of the case, especially given the company’s limited cash.
Read More: SVB Financial Must Wait to Get Back $2 Billion from FDIC
“This process has got to move along,” Glenn said in the hearing Wednesday. “It was clear from the first day hearing that liquidity is limited and it needs to move forward rapidly.”
SVB Financial is negotiating with both the FDIC and First Citizens in order to obtain the records at issue and is close to signing a non-disclosure agreement that will aid the exchange, Bromley said.
Siphoned Cash
SVB Financial and its bondholders are still waiting to see whether it will get back $2 billion the FDIC seized from the holding company before its bankruptcy filing. Still, Bromley said the company isn’t in “imminent danger” and has $180 million on hand.
A lawyer for the FDIC said the agency is still determining what potential “set-off” rights, or claims, the agency might have against SVB Financial. Judge Glenn ordered the FDIC to file a statement that explains the agency’s authority to withhold the $2 billion within a week.
“I’ve been asking this question basically since day one and haven’t received any answers,” Glenn said.
The bankruptcy is SVB Financial Group, 23-10367, US Bankruptcy Court for the Southern District of New York.
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