SVB Financial Group, the former parent of Silicon Valley Bank (SVB), filed in the Southern District of New York under Section 11 of the US Bankruptcy Code. The company hopes for a reorganization. SVB said its action does not include SVB Capital and SVB Securities, which will continue to operate while SVB Financial explores strategic options.
SVB Financial Group also stressed that the company is no longer affiliated with Silicon Valley Bank. The bank’s successor, Silicon Valley Bridge Bank, operates under the jurisdiction of the Federal Deposit Insurance Corporation (FDIC) and is not included in the Article 11 application.
SVB Group estimates the firm’s liquidity is $2.2 billion. In addition to cash and stakes in SVB Capital and SVB Securities, the firm has “investment accounts in securities and other assets” for which strategic options are also being explored.
SVB Group’s accumulated debt is approximately $3.3 billion in unsecured bonds, which have no claim on the property of SVB Capital or SVB Securities.
The California Department of Financial Protection and Innovation shut down Silicon Valley Bank on March 10. The American regulator – the Federal Deposit Insurance Corporation (FDIC) – now manages all operations of the bank.
The 16th largest U.S. bank went bust after depositors worried about the bank’s balance sheet – mainly tech and venture capital firms – decided to withdraw their money this week. SVB has been called the tech bank because its clients were mostly Silicon Valley startups. Popular cryptocurrency companies also kept their funds there.
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