NEW YORK, Aug 2 (Reuters) - SVB Financial Group ( SIVBQ ), the

former owner of failed Silicon Valley Bank, received a U.S.

judge's permission on Friday to turn over its assets to

creditors and end its bankruptcy.

Its bankruptcy restructuring has made provision for the

creation of a trust to pursue litigation against the U.S.

Federal Deposit Insurance Corporation which seized $1.9 billion

from SVB Financial's ( SIVBQ ) bank accounts during Silicon Valley Bank's

2023 collapse - one of the largest in U.S. banking history.

The battle over the seized funds will play out in a

California federal court.

SVB Financial ( SIVBQ ) has argued the cash should be returned because

the FDIC had invoked a "systemic risk" exemption to protect all

deposits at Silicon Valley Bank, including accounts with more

than the $250,000 that the FDIC typically protects.

The FDIC has countered that it did not intend to protect the

bank accounts of the parent company, saying the money was

legally seized to offset its costs in rescuing the bank.

Depending on the outcome of the litigation, SVB Financial's ( SIVBQ )

senior bondholders who are owed $3.3 billion, will be paid

between 41% and 96% of what they are owed.

The bondholders include MFN Partners, Pacific Investment

Management Company, Bank of America Securities, JP Morgan

Securities, and King Street Capital, according to court

documents.

As part of its bankruptcy restructuring, SVB Financial ( SIVBQ ) has

also sold assets, spinning off its venture capital business and

investment banking unit.