The FDIC’s decision to lock down the US$2 billion “creates jeopardy” in the bankruptcy case, said Tom Lauria, a lawyer representing a large bondholder, Appaloosa LP.
The former owner of Silicon Valley Bank, seized earlier this month by regulators, will need to wait, possibly for several months, to know if it can get back about US$2 billion ($2.67 billion) in cash it would need to repay bondholders and other creditors.
SVB Financial Group won provisional court approval Tuesday to spend only a fraction of the cash the company claims federal regulators must return. What happens with the rest of the money will need to be decided in the coming months, with lawyers for bondholders owed more than US$3.3 billion saying they are concerned that the Federal Deposit Insurance Corp. will try to keep the cash.
