Silicon Valley Bank customers whose deposits were seized by U.S. authorities after the lender’s collapse are fighting back, the Wall Street Journal reported. Customers who held money in the bank’s Cayman Islands branch found their accounts wiped down to zero after SVB collapsed in March, because a U.S. move to guarantee deposits didn’t apply to them. Their pain was compounded when they found out First Citizens BancShares had acquired their loans from SVB — meaning they had lost their money, but kept their debts. Several firms including venture-capital funds in Hong Kong and mainland China have pushed back, filing a petition in a Cayman Islands court last week to initiate a windup procedure of the former U.S. bank’s branch there. The depositors held around $38 million in their Caymans SVB accounts, according to the petition. The depositors hope the move will increase their chances of getting their money back from the Federal Deposit Insurance Corp., which seized their funds. The petition, filed by law firm Campbells to the Cayman court on June 13, argues that it is “just and equitable” for SVB’s Cayman Islands branch to be wound up, since the branch was unable to pay debt. The petition also asks the court to approve the appointment of official liquidators to help find ways to retrieve the funds. The liquidators will be able to investigate and keep depositors informed and to ensure they are treated fairly, said Paul Kennedy, a partner at Campbells.
