SVB Financial听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鈥檚 counsel Sullivan & Cromwell in the Bankruptcy Court for the Southern District of New York, indicates that the bulk of this claim鈥攁round $605mn鈥攊s 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. 搂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. 搂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鈥檚 position, potentially affecting the characterization of a substantial stock loss and, in turn, the debtor鈥檚 ability to offset taxable income.
The company secured approval of its鈥痮n May 16 and is seeking confirmation on July 15. However, the amended claim from the IRS, coupled with the IRS鈥檚 opposition to certain deductions and characterizations of debt claimed by SVB Financial, raises the possibility of further confirmation delays.
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Jennifer Lappe, J.D.
Legal Analyst
LevFin Insights

