• SVB Financial Group, the parent company of Silicon Valley Bank, has filed for bankruptcy protection.
• The filing has been submitted in the Southern District of New York and aims to preserve company value.
• Customers will regain access to their funds through FDIC insurance and an emergency plan from the Biden administration and U.S. Treasury.
Silicon Valley Bank Parent Company Files for Bankruptcy Protection
SVB Financial Group, the parent company of Silicon Valley Bank, has voluntarily filed for a court-organized reorganization under Chapter 11 of the U.S. Bankruptcy Code in the Southern District of New York according to a press release from the company on March 17th. The legal process will allow it to explore strategic alternatives as determined by a board-appointed restructuring team made up of five members and any sale that is arranged will need to be approved in court before it is executed.
Company Assets
The press release indicated that SVB Financial Group believes it has $2.2 billion of liquidity, $3.3 billion of debt in aggregate principal amount of unsecured notes, and $3.7 billion of outstanding preferred equity associated with its bankruptcy case which aims to preserve company value. Joele Frank, a company known for its involvement in shareholder activism claims, is involved in the case as well.
Continued Operations
Though Silicon Valley Bank has failed, SVB’s other services — SVB Capital and SVB Securities — will continue to provide services as normal despite being no longer associated with the failed Silicon Valley Bank per the press release .
Customer Funds
Silicon Valley Bank halted operations on March 10 as U.S regulators closed down the bank and took control over customer assets shortly after announcing plans to over 2 billion dollars leading to a weekend bank run affecting companies such as Circle and BlockFi among others who had accounts at Silicon Valley Bank . While bankruptcy protection may help with preserving value , customers affected by this closure will receive their insured portion back through Federal Deposit Insurance Corporation (FDIC) while an emergency plan from Biden administration and US Treasury can also provide funds back depending on individual cases .
Conclusion
Overall , this move by SVB Financial Group allows them time investigate strategic options while customers affected get their funds back through FDIC insurance or Biden’s emergency plan .