(Bloomberg) -- Appaloosa Management, Centerbridge Partners and Silver Point Capital are among the titans of distressed debt investing pushing for big payouts in the bankruptcy case of the former owner of Silicon Valley Bank, new court papers show.
A group of eight firms holds more than $1.1 billion in senior notes and roughly $1.5 billion worth of preferred equity issued by SVB Financial Group, the holding company that went bust after a run on its bank earlier this year. By banding together and sharing the cost of attorneys and financial advisers, such groups can have enormous sway in major corporate bankruptcy cases.
SVB filed for bankruptcy in March after the Federal Deposit Insurance Corporation placed its bank into receivership. Since then, a dispute has been simmering over whether SVB and its creditors can get back about $2 billion in cash the holding company had on deposit that was sent to the FDIC.
What happens to the money will need to be decided in the coming months, with lawyers for bondholders owed more than $3.3 billion saying they are concerned that the FDIC will try to keep the cash.
In a court hearing in March shortly after SVB filed for Chapter 11 bankruptcy protection, lawyers for Appaloosa complained about an initial FDIC decision to lock down the $2 billion.
The bankruptcy case is SVB Financial Group, 23-10367, US Bankruptcy Court for the Southern District of New York.
