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 $2 billion in cash it would need to repay bondholders and other creditors, Bloomberg News reported. 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 $3.3 billion saying they are concerned that the Federal Deposit Insurance Corp. will try to keep the cash. The FDIC’s decision to lock down the $2 billion “creates jeopardy” in the bankruptcy case, said Tom Lauria, a lawyer representing a large bondholder, Appaloosa LP. “It seems to be a more urgent issue than a latent one in the context of this case,” Lauria told Bankruptcy Judge Martin Glenn during a hearing in federal court in Manhattan. Under FDIC receivership rules it can take months for the agency to decide whether the money will be returned and then years if that decision is appealed, lawyers said during the hearing.
