Federal bank regulators must turn over any tax refund checks made out to SVB Financial Group, a judge said Wednesday, handing the bankrupt holding company a victory in its strategy to pay bondholders, Bloomberg News reported. Over the next two years, SVB Financial is expecting about $300 million in tax refunds, company attorney James Bromley said during a court hearing in Manhattan. A few checks have already been mailed out, but wound up in the hands of the federal receiver or with First Citizens Bank & Trust Company, which took over Silicon Valley Bank’s deposits. Bankruptcy Judge Martin Glenn denied a request by the Federal Deposit Insurance Corp. to hold the checks in an escrow account while SVB Financial and bank regulators decide how to split up the tax refunds. Under a tax-sharing agreement, the money will eventually be divided between the holding company and an FDIC receiver, who is overseeing the remnants of Silicon Valley Bank. “There is a process,” Glenn told FDIC lawyer Derek Baker. “You want to bypass all that and keep the money for yourself.” When SVB Financial filed for bankruptcy in March, it had huge net operating losses and was owed substantial tax refunds. The refund checks and the right to use the losses to reduce future income taxes are among the most valuable assets available to pay creditors, Bromley said.
