By Dietrich Knauth

NEW YORK (Reuters) – SVB Monetary Group, the previous proprietor of failed Silicon Valley Financial institution, obtained a U.S. choose’s permission on Friday to show over its property to collectors and finish its chapter.

Its chapter restructuring has made provision for the creation of a belief to pursue litigation towards the U.S. Federal Deposit Insurance coverage Company which seized $1.9 billion from SVB Monetary’s financial institution accounts throughout Silicon Valley Financial institution’s 2023 collapse – one of many largest in U.S. banking historical past.

The battle over the seized funds will play out in a California federal courtroom.

SVB Monetary has argued the money needs to be returned as a result of the FDIC had invoked a “systemic threat” exemption to guard all deposits at Silicon Valley Financial institution, together with accounts with greater than the $250,000 that the FDIC usually protects.

The FDIC has countered that it didn’t intend to guard the financial institution accounts of the mother or father firm, saying the cash was legally seized to offset its prices in rescuing the financial institution.

Relying on the end result of the litigation, SVB Monetary’s senior bondholders who’re owed $3.3 billion, shall be paid between 41% and 96% of what they’re owed.

The bondholders embrace MFN Companions, Pacific Funding Administration Firm, Financial institution of America Securities, JP Morgan Securities, and King Road Capital, based on courtroom paperwork.

As a part of its chapter restructuring, SVB Monetary has additionally offered property, spinning off its enterprise capital enterprise and funding banking unit.