SVB Financial nears approval to sell its investment banking business

First Citizens Bancshares (Tennessee)

29/06/2023 20:53

By Dietrich Knauth
       NEW YORK, June 29 (Reuters) - A U.S. bankruptcy judge
said Thursday that he would allow SVB Financial Group to sell
its investment banking division, once the company has ensured
that it is not releasing any liabilities related to the collapse
of its Silicon Valley Bank unit.
    U.S. Bankruptcy Judge Martin Glenn in Manhattan said during
a Thursday court hearing that he could not approve the sale of
SVB Securities to a group led by the subsidiary's former CEO
Jeff Leerink and backed by funds managed by The Baupost Group,
as initially proposed.
    Glenn said he was unsure if Leerink and other executives had
any actual liability, but he could not grant them sweeping legal
protections without more evidence. 
        James Bromley, an attorney for SVB Financial, told Glenn
that it would remove the liability releases from the deal by
Friday. Glenn said he would likely approve the sale once he
reviews the revised deal.
  
    At the court hearing, Glenn chastised SVB Financial for not
clearly explaining or justifying a provision in the deal that
would have released Leerink and other insiders from any
liability associated with Silicon Valley Bank's collapse. 
    "You're releasing them from everything," Glenn told SVB
Financial's attorneys. "I can't believe you'd even try to sneak
this by me."
    SVB Financial owned Silicon Valley Bank before it was seized
by the U.S. Federal Deposit Insurance Corporation (FDIC) in
March, and it is attempting to sell its remaining assets in
bankruptcy. 
    Glenn also criticized the FDIC during the court hearing,
saying he would not allow the agency to block SVB Financial from
getting information about its seizure of about $2 billion from
SVB Financial' s bank accounts. 
    "I'm not going to put up with a lot of nonsense from the
FDIC," Glenn said. "They're either going to play by the rules,
or they're going to risk contempt."
    FDIC attorney Erik Bond said SVB Financial had demanded too
much information and had not complied with FDIC's regulations
for record requests, but that he would discuss the dispute with
the company after the court hearing. 
    Silicon Valley Bank's failure in March triggered the worst
U.S. banking crisis in 15 years. U.S. regulators had to step in
to backstop a deal for regional lender First Citizens BancShares
(FCNCA.O) to buy the failed bank.

 (Reporting by Dietrich Knauth, Editing by Alexia Garamfalvi and
Diane Craft)
 ((Dietrich.Knauth@thomsonreuters.com;))