Ex-parent of failed SVB goes bankrupt in move to protect assets, repay creditors

The former parent of Silicon Valley Bank filed for bankruptcy a week after a deposit rush prompted regulators to seize its banking division.

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SVB Financial Group listed assets and liabilities of up to $10 billion each in a Chapter 11 petition filed in New York. Broker-dealer SVB Securities and venture capital arm SVB Capital are not included in the filing, according to a statement.

Because Silicon Valley Bank was a California-licensed commercial bank and part of the Federal Reserve System, it was not eligible for bankruptcy and instead ended up in receivership with the Federal Deposit Insurance Corp. (FDIC). However, its former parent company is eligible to file a request to protect its remaining assets and work on repaying creditors, including bondholders.

Following the receivership, SVB Financial is no longer affiliated with Silicon Valley Bank NA or its private banking and wealth management business, SVB Private, the company said.

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SVB “believes” has approximately $2.2 billion in liquidity and counts its stakes in SVB Capital and SVB Securities among its assets, the statement said. It owes around $3.3 billion to bondholders.

Centerview Partners is assisting SVB in evaluating strategic alternatives for SVB Capital and SVB Securities. The process has generated a lot of interest, and any sale would require bankruptcy court approval, the bankruptcy court said.

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“SVB Financial Group will continue to work with Silicon Valley Bridge Bank,” William Kosturos, SVB Financial Group’s chief restructuring officer, said in the statement. “We strive to find practical solutions to maximize the achievable value for stakeholders of both companies.”

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collapse of the bank

Santa Clara, Calif.-based SVB was the largest bank to fail in more than a decade, with total assets of about $209 billion late last year, the FDIC said. It is also the second largest bank to come under agency receivership, behind only Washington Mutual Inc., which imploded in 2008.

Concerns in tech circles surged last week after Peter Thiel’s Founders Fund and other high-profile venture capital firms advised their portfolio companies to withdraw money from the bank. That advice came a day after the bank’s parent company announced it would seek to raise more than $2 billion following a significant loss on its portfolio.

Silicon Valley Bank was founded in 1983 via a poker game between Bill Biggerstaff and Robert Medearis, according to a statement marking the bank’s 20th anniversary. The company specializes in providing financial services to technology startups.

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SVB Financial Corp. held approximately $2.3 billion in cash, $500 million in securities and $475 million in other assets as of December 31, according to regulatory filings.

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SVB bonds moved higher on Friday morning. The company’s 2.1 percent notes due 2028 were up about 6.5 cents against the dollar to 64.5 cents as of 8:50 a.m. in New York, according to Trace data.

The case is SVB Financial Group, 23-10367, US Bankruptcy Court for the Southern District of New York.


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