United States: Creditor Claims Against Silicon Valley Bank And Signature Bank

The FDIC has announced the proof of claim deadlines for proofs of claim to be filed with the FDIC as receiver of the failed banks, Silicon Valley Bank ("SVB") and Signature Bank.

The Claims Bar Dates to file proofs of claim:

The deadline to file a proof of claim against SVB is on or before July 10, 2023.¹

The deadline to file a proof of claim against Signature Bank is on or before July 17, 2023.²

Who must file a proof of claim:

Everyone who was a creditor of SVB prior to March 10, 2023, and who was a creditor of Signature Bank prior to March 12, 2023, must file a proof of claim with the FDIC as receiver, in order to preserve their claim against SVB and Signature Bank. The FDIC as receiver is defining creditors of the failed banks to mean, "If you or your company provided a service or product, leased space, furniture, or equipment to [the failed bank] prior to [the date of closure] and have not been paid, you may have a claim against the [failed bank]."³

Creditors are a broader category. Indeed, the FDIC is required to "send prompt notice of the closing to all trade creditors, employees, taxing entities, and any other creditors who may be owed money by the failed bank. The FDIC will also publish notices in local newspapers for several months after the failure."⁴Creditors who the FDIC identifies should receive a notice from the FDIC that "will include instructions and the appropriate forms for filing a claim against the receivership. Documentation of the claim is required and must be submitted in a timely manner."⁵ But ultimately everyone, whether a corporate entity or a natural person, who was owed or was potentially owed money by the failed banks that has not been paid must file a proof of claim with the FDIC as receiver, even if the claim is only a contingent, potential or unliquidated claim—or the unmade claim will be disallowed by the FDIC as receiver as a final disallowance pursuant to 12 U.S.C. § 1821(d)(5)(C).⁶ If a creditor does not file a claim, the FDIC has historically objected to claims brought by other means, including lawsuits, on the grounds that the creditor has failed to exhaust its administrative remedies.

Depositors of the failed banks have had their deposits returned and do not need to file proofs of claim with the FDIC as receiver in order to preserve their rights to their deposits. Depositors must, however, file proofs of claim to preserve their rights to payment in their capacity as a creditor, if they are a creditor of the failed banks in another capacity.

Finally, the FDIC takes the position that shareholders of SVB's holding company, SVB Financial Group, was not included in the closing of SVB or the resulting Receivership, and advises shareholders to contact SVB Financial Group directly. We note that SVB Financial Group is the subject of a recently filed bankruptcy case in the United States Bankruptcy Court for the Southern District of New York, docket no. 23-10367-mg, and shareholders may wish to monitor that case.

How do I file a proof of claim:

The FDIC as receiver will accept proofs of claim electronically utilizing the Non-Deposit FDIC Claims Portal, or by email sent to nondepclaimsdal@fdic.gov.

What will happen to my proof of claim:

"Most general creditor claims will be acknowledged or denied by the FDIC within 180 days. A creditor will receive a Receiver's Certificate in the amount of the claim and may receive payments from the receivership as the assets are liquidated."⁷ "In most cases, general creditors . . . realize little or no recovery" on their claims, however, because administrative expenses are paid first, after which insured depositors must be paid back their deposits, followed by the uninsured depositors, and then general creditors being paid on their approved claims (followed by subordinated debt holders, followed by stockholders).⁸ Here, both the insured and uninsured depositors were paid back all of their deposits in full pursuant to the FDIC's authority and the exercise of the systemic risk exception.⁹

Footnotes

1. https://www.fdic.gov/resources/resolutions/bank-failures/failed-bank-list/silicon-valley.html.

2. https://www.fdic.gov/resources/resolutions/bank-failures/failed-bank-list/signature-ny.html.

3. See fn. 1 & fn. 2.

4. https://www.fdic.gov/consumers/banking/facts/creditors.html.

5. Id.

6. See fn. 1 & fn. 2.

7. https://www.fdic.gov/consumers/banking/facts/creditors.html.

8. https://www.fdic.gov/consumers/banking/facts/priority.html; https://www.fdic.gov/resources/resolutions/bank-failures/failed-bank-list/silicon-valley.html; https://www.fdic.gov/resources/resolutions/bank-failures/failed-bank-list/signature-ny.html.

9. See 12 U.S.C. § 1823(c)(4)(G). The statute provides that if excess losses result from the exercise of the systemic risk exception, the FDIC "shall recover the loss to the Deposit Insurance Fund . . . from "1 or more special assessments on insured depository institutions, depository institution holding companies . . . or both . . . ." Id.

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