Skip to main content

SVB Financial filed a notice of developments detailing an amended proof of claim by the IRS. The claim amounts to a substantial unsecured priority claim totaling approximately $649mn for the audit years 2020 through 2022.

The notice, filed by debtor’s counsel Sullivan & Cromwell in the Bankruptcy Court for the Southern District of New York, indicates that the bulk of this claim—around $605mn—is attributed to the tax year ending December 31, 2022. The 2022 liability arises from the IRS’s decision to reject a deduction claimed by SVB Financial Group under the mark-to-market accounting method as stipulated in 26 U.S.C. §475.

SVB Financial, in its notice, disagrees with the IRS tax assessment and is prepared to litigate the matter, anticipating a trial that may commence as early as July 15 for a determination of tax liability under 11 U.S.C. §505.

SVB Financial had previously requested a private letter ruling concerning the tax treatment of its reorganization plan. However, as disclosed in the recent court filing, the IRS has tentatively opposed the debtor’s position, potentially affecting the characterization of a substantial stock loss and, in turn, the debtor’s ability to offset taxable income.

The company secured approval of its disclosure statement on May 16 and is seeking confirmation on July 15. However, the amended claim from the IRS, coupled with the IRS’s opposition to certain deductions and characterizations of debt claimed by SVB Financial, raises the possibility of further confirmation delays.

Related Documents:
Statement Notice of Development Re Discussions with IRS

Jennifer Lappe, J.D.
Legal Analyst
LevFin Insights



This Report is for informational purposes only. Neither the information contained in this Report, nor any opinion expressed therein is intended as an offer or solicitation with respect to the purchase or sale of any security or as personalized investment advice. CreditSights and its affiliates do not recommend the purchase or sale of financial products or securities, and do not give investment advice or provide any legal, auditing, accounting, appraisal, valuation or actuarial services. Neither CreditSights nor the persons involved in preparing this Report or their respective households has a financial interest in the securities discussed herein. Recommendations made in a report may not be suitable for all investors and do not take into account any particular user’s investment risk tolerance, return objectives, asset allocation, investment horizon, or any other factors or constraints.
Information included in any article that includes analysis of documents, agreements, controversies, or proceedings is for informational purposes only and does not constitute legal advice. No attorney client relationship is created between any reader and CreditSights as a result of the publication of any research report, or any response provided by CreditSights (including, but not limited to, the ask an analyst feature or any other analyst interaction) or as the result of the payment to CreditSights of subscription fees. The material included in an article may not reflect the most current legal developments. We disclaim all liability in respect to actions taken or not taken based on any or all the contents of any research report or communication to the fullest extent permitted by law.
Reproduction of this report, even for internal distribution, is strictly prohibited. Receipt and review of this research report constitutes your agreement not to redistribute, retransmit, or disclose to others the contents, opinions, conclusion or information contained in this report (including any investment recommendations or estimates) without first obtaining express permission from CreditSights. The information in this Report has been obtained from sources believed to be reliable; however, neither its accuracy, nor completeness, nor the opinions based thereon are guaranteed. The products are being provided to the user on an “as is” basis, exclusive of any express or implied warranty or representation of any kind, including as to the accuracy, timeliness, completeness, or merchantability or fitness for any particular purpose of the report or of any such information or data, or that the report will meet any user’s requirements. CreditSights may issue or may have issued other reports that are inconsistent with or may reach different conclusions than those represented in this Report, and all opinions are reflective of judgments made on the original date of publication. CreditSights is under no obligation to ensure that other reports are brought to the attention of any recipient of the Products.
CreditSights Risk Products, including its Credit Quality Scores and related information, and discontinued products, such as CreditSights Ratings, are provided by CreditSights Analytics, LLC. CreditSights Limited is authorised and regulated by the Financial Conduct Authority (FCA). This product is not intended for use in the UK by retail clients, as defined by the FCA. This report is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation.
Certain data appearing herein is owned by, and used under license from, certain third parties. Please see Legal Notices for important information and limitations regarding such data. For terms of use, see Terms & Conditions.
If you have any questions regarding the contents of this report contact CreditSights at
© 2024. CreditSights, Inc. All rights reserved.