NEW YORK, Could 17 (Reuters) – A U.S. chapter choose on Wednesday ordered the U.S. Federal Deposit Insurance coverage Company to return $10 million in seized tax refund checks to SVB Monetary, the bankrupt former father or mother of failed Silicon Valley Financial institution.
Choose Martin Glenn in Manhattan handed a victory to SVB Monetary in broader dispute over FDIC’s efforts to recoup its prices in rescuing the failed Silicon Valley Financial institution, stopping the regulator from claiming future tax refunds that SVB Monetary valued at $300 million.
FDIC sought to escrow these funds whereas the regulator determines whether or not they correctly belong to the seized financial institution or the bankrupt father or mother firm.
Glenn dominated that FDIC had no authority to intercept checks that had been clearly written out to “SVB Monetary.” He ordered FDIC to return the intercepted checks by Friday, and to ship any future tax refunds checks to SVB Monetary.
The FDIC took over Silicon Valley Financial institution on March 10 after depositors rushed to tug out their cash in a financial institution run that additionally introduced down Signature Financial institution and worn out greater than half the market worth of a number of different U.S. regional lenders.
Throughout the takeover, the FDIC additionally seized about $2 billion from SVB Monetary’s personal accounts on the financial institution, a transfer that has slowed SVB Monetary’s progress in a chapter continuing to promote remaining belongings like its enterprise capital investments.
The FDIC has mentioned it’s legally in a position to maintain the seized funds whereas it determines how a lot SVB Monetary ought to contribute to the financial institution takeover prices. The FDIC has estimated that the financial institution failure precipitated a $16 billion hit to its insurance coverage fund.
FDIC argued that the tax refunds could also be owed to the seized financial institution, which is now run by First Residents BancShares, below a tax settlement between the financial institution and its former father or mother firm.
However Glenn dominated that the tax settlement gave SVB Monetary the duty to calculate and allocate any refunds owed to the financial institution, and didn’t permit FDIC or the seized financial institution’s new proprietor to unilaterally declare any portion of the refunds.
Reporting by Dietrich Knauth
Modifying by Marguerita Choy
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