SVB Financial, the former unit of Silicon Valley Bank has filed for chapter 11 bankruptcy protection to seek buyers for its assets.
In a statement made on Friday, SVB Financial disclosed that it no longer has affiliations with Silicon Valley Bank or its private banking and wealth management unit, SVB private, following the recent takeover of the tech-focused bank by the Federal Deposit Insurance Corporation (FDIC). The company further disclosed that Silicon Valley Bank and its partner entities are not included in the recent filing.
SVB capital has about $9.5 billion in assets under management, with investments both in a number of major VCs and funds, as well as startups directly. SVB securities have been around in one form or another since 1999. Based out of Boston, it has brokered and provided services to startups across nearly 700 deals.
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SVB Financial chief restructuring officer William Kosturos disclosed that the chapter 11 bankruptcy filing process will allow the company to preserve value as it evaluates strategic alternatives for its prized businesses, as well as its other assets and investments. Kosturos stressed that SVB Capital and SVB Securities will continue to operate and serve clients led by their independent teams.
One notable thing to note about SVB’s recent chapter 11 bankruptcy filing, is that it will enable the company to resume operations outside of the FDIC’s control while it works through the next steps. To that end, the company disclosed that it plans to file customary first day motions with the bankruptcy court that among other things, it will seek authorization to continue operations of SVB financial group in the course of business as soon as a hearing is scheduled.
One week after Silicon Valley Bank’s collapse, its former parent company is seeking Chapter 11 bankruptcy protection. SVB Financial Group says it has roughly $2.2 billion of liquidity and also has other assets that are being considered for sale. The court-led bankruptcy is separate from the Federal Deposit Insurance Corporation’s efforts to make Silicon Valley Bank’s depositors whole, The New York Times notes. SVB Financial’s assets include SVB Capital, its investment arm, and SVB Securities, a brokerage firm. Both units continue to operate and are not part of the filing.
The failures of Silicon Valley Bank and Signature Bank cast a shadow on credit-rating agencies including S&P and Moody’s, The Wall Street Journal reports. Both institutions had solid ratings when they collapsed. (LinkedIn News)
It would be recalled that three days ago, SVB Financial Group and two top executives were sued by shareholders over the collapse of Silicon Valley Bank, as global stocks continued to suffer, despite assurances from President Joe Biden.
The bank’s shareholders accused SVB Financial Group chief executive, Greg Becker, and chief financial officer, Daniel Beck, of concealing how rising interest rates would leave its Silicon Valley Bank unit “particularly susceptible” to a bank run.
SVB had surprised the market two days earlier by disclosing a $1.8bn after-tax loss from investment sales and that it planned to raise capital, as it scrambled to meet demands from customers who wanted to access their deposits. The bank collapse has sparked fears that other banks could be vulnerable to rising interest rates through an over-exposure to falling bond prices.
SVB disclosed on Monday that it will explore strategic alternatives for what remains of the company. The FDIC has already named Tim Mayopoulos, the former chief of Fannie Mae, as the chief executive officer of Silicon Valley Bank.
