NYC seeks millions from failed Silicon Valley Bank for taxes

New York City is trying to collect more than $2.1 million it says Silicon Valley Bank owes in back taxes from before the California-based regional lender collapsed last year.

In a complaint filed Thursday against the Federal Deposit Insurance Corporation, the receiver for the failed bank, the city cites corporation business tax “deficiencies” for 2017 through 2021 and is also seeking interest and penalties. The city said the FDIC in November denied its request to be paid out of remaining bank assets.

“The city has a legitimate tax claim against the SVB and is entitled to collect taxes due,” New York’s lawyers said in the complaint, filed in federal court in Washington. “The FDIC, in its capacity as receiver for SVB, is liable for the claim amount.”

Also on Thursday, Silicon Valley Bank’s Cayman Islands branch filed for Chapter 15 bankruptcy protection in New York.

The March collapse of Silicon Valley Bank, following a wave of withdrawals by the tech startups and venture capital firms that formed its client base, was the biggest U.S. bank failure in more than a decade and presaged a banking crisis that engulfed several other financial institutions.

This month, the parent company of Silicon Valley Bank announced it had struck a deal with key creditors in a step toward resolving its bankruptcy case. The arrangement, which requires court approval, involves forming a new company that would hold valuable assets like the firm’s venture capital arm — SVB Capital — and tax attributes potentially worth billions of dollars, according to court papers. 

The tax case is City of New York v. Federal Deposit Insurance Corporation, 24-cv-00160, U.S. District Court, District of Columbia (Washington).