SVB Financial Trust obtained a ruling dismissing over $944 million in claims and adversary proceedings brought by the liquidators of Silicon Valley Bank’s Cayman Islands branch. SVB Financial Trust is the successor to SVB Financial Group, the former parent of Silicon Valley Bank, following SVB Financial Group’s emergence from Chapter 11 last November.
After a two-day evidentiary trial and numerous rounds of briefing over an 18-month period, Chief Judge Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York held in a September 29 ruling that the Cayman Islands branch liquidators lacked standing and their claims were time barred.
Silicon Valley Bank was placed into receivership by the Federal Deposit Insurance Corporation in March 2023. SVB Financial Group filed for Chapter 11 bankruptcy shortly thereafter. The SVB Cayman branch was excluded from the FDIC’s asset sale to First-Citizens Bank. The plaintiffs sought recovery on behalf of Cayman creditors who had deposited funds with the Cayman branch in accounts that were not insured by the FDIC.
Among other things, the court held that the Cayman Liquidators were not agents of the Cayman creditors and lacked authority under Cayman law to act on their behalf in U.S. proceedings. While the Cayman court had issued orders allowing the Liquidators to pursue certain actions, these did not confer standing under U.S. law.
The S&C team representing SVB Financial Trust included James Bromley, Adam Paris, Christian Jensen, Matthew Souza and Caleb Downs.