Embattled lender SVB Financial, which is embroiled in a dispute with the U.S. Federal Deposit Insurance Company (FDIC), says it is losing $8.5 million a month in interest, which is enough to cover the company’s bankruptcy lawyers and other court costs, Reuters has reported.
To recoup this lost revenue, the bankrupt parent company behind Silicon Valley Bank requested on Tuesday (Aug.15) that nearly $2 billion in seized funds be placed into an escrow account to prevent the further loss of millions of dollars in interest revenue.
This request comes after the company filed suit against the FDIC last month, demanding the money be put into an escrow account pending a final court ruling.
However, the FDIC refused, prompting a statement from FDIC attorney Ben Finestone.
“The agency does not have to pay pre-judgment interest,” Finestone said. If the FDIC continues to withhold the money, SVB Financial stands to lose $100 million annually, far more than the $42 million it claims to have already lost in interest.
U.S. Bankruptcy Judge Martin Glenn has agreed to hold a hearing to debate SVB Financial’s request for the escrow account on Sept. 11 as the company aims to recover the lost interest.
SVB Financial filed for bankruptcy protection in March and has since sold its investment banking and credit investment businesses, choosing to only keep its venture capital arm Silicon Valley Bank (SVB) — at least for now.
In July, PYMNTS reported that cash flow management company Settle secured a $145 million credit facility with Silicon Valley Bank, signaling the bank’s cautious restart of lending operations after its collapse and purchase by First Citizens Bank earlier this year.
On Aug. 5, PYMNTS reported that the original venture backers of Canadian eCommerce lender Clearco — Inovia Capital and Founders Circle Capital — together with the VC unit of SVB, are buying SVB’s $60 million loan to Clearco, which was once SVB Canada’s largest debtor among more than 200 firms.
Clearco’s original backers stepped in to purchase the loan from Canada’s financial regulator, which has been working to wind down the failed bank’s Canadian operations since mid-March.
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