SVB Financial Loses $1.7 Billion FDIC Claim in Federal Court Ruling

A federal judge has rejected SVB Financial Trust’s effort to recover about $1.7 billion tied to deposits at Silicon Valley Bank, handing the Federal Deposit Insurance Corp. a victory in litigation stemming from the bank’s 2023 collapse. U.S. District Judge Beth Labson Freeman of the Northern District of California ruled Friday that the trust cannot recover the funds because decisions by officers of SVB’s former parent contributed to the bank’s failure, according to Bloomberg Law. The litigation followed SVB Financial Group’s bankruptcy after regulators closed Silicon Valley Bank in March 2023. Court records show the parties narrowed the dispute to a contract claim capped at $1.7 billion, subject to the FDIC’s affirmative defenses. Earlier this year, Freeman ruled that California’s business-judgment rule did not protect relevant officers. The latest ruling could reduce recoveries for creditors of the bankrupt parent. An appeal remains possible, but no appeal has been publicly confirmed.