by courts as creating a federal statutory. It further argues that FDIC-R succeeds to all of SVB’s contractual rights, including setoff rights in the Deposit Agreement and Disclosure Statement-Business Accounts providing for setting off any “direct, indirect and/or acquired obligations that you owe us, regardless of the source of funds in the account, to the fullest extent permitted by law.” Importantly, the FDIC argues that § 1821(d)(2)(A) provides a common law right to setoff by providing the FDIC-R with the right to succeed to SVB’s claims or causes of action that it has against its parent, SVBFG. The claims FDIC-R may have against SVBFG would appear to include those related to the bank’s collapse, including the mismanagement alleged in the report issued by the Federal Reserve Board on April 23. Private parties have already asserted claims against SVB’s current or former directors and/or officers in seven putative securities class actions according to a motion filed on May 3 in the bankruptcy case to allow for advancement and payment of “The resolution of this issue potentially impacts whether SVBFG must obtain a bankruptcy loan to operate in Chapter 11, as disclosed in a court hearing on April 26.” defense costs as insureds under director & officer liability policies, which provide more than $200 million in coverage. This $2 billion issue does not appear to be getting resolved consensually anytime soon. The Bankruptcy Court may be asked to decide, which could lead to a dispute over whether it has jurisdiction in light of the FDIC arguing that the claims resolution process under Title 12 is exclusive. This issue will be one of many that arises in SVBFG’s bankruptcy case that is worth banks and their management to be aware of while providing a glimpse into the interplay between the FDIC’s receivership and SVBFG’s Chapter 11 case. ■ Spencer Fane partner Eric Van Horn assists clients nationwide with all aspects of bankruptcy, restructurings, reorganizations, negotiations, collection actions, multijurisdictional insolvencies, corporate liquidations, and bankruptcy litigation. He can be reached at 214.459.5895 and ericvanhorn@spencerfane.com. 2023 Issue 3 | 15
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