On March 17, 2023, SVB Financial Group, the parent company of Silicon Valley Bank, filed for Chapter 11 bankruptcy protection in the Southern District of New York. The company stated that it is no longer associated with Silicon Valley Bank (SVB) after it was placed in receivership by the Federal Deposit Insurance Corporation (FDIC) last week.
3 SVB entities not affected by the bankruptcy declaration; CEO faces scrutiny over stock sale before Silicon Valley Bank collapse
On Friday, SVB Financial Group published a Press release detailing its voluntary petition for a court-supervised reorganization under Chapter 11 bankruptcy protection. The announcement stated that the purpose of the filing is to preserve the company’s remaining value. The bankruptcy filing does not involve three entities, including the FDIC-operated bridge bank Silicon Valley Bank, NA, SVB Securities and SVB Capital funds.
All three financial institution verticals are still operating as they were before SVB was placed in receivership by the FDIC. SVB Financial Group stated that it has “approximately $2.2 billion of liquidity” and has financed debt of “approximately $3.3 billion.” The finance company also has $3.7 billion of preferred shares outstanding, which will be used to evaluate strategic alternatives, according to the firm’s explanation.
“The Chapter 11 process will allow SVB Financial Group to preserve value while evaluating strategic alternatives for its prized businesses and assets, especially SVB Capital and SVB Securities,” SVB Financial Group restructuring director William Kosturos said in a statement. “SVB Capital and SVB Securities continue to operate and serve clients, led by their long-standing and independent leadership teams.” Kosturos continued:
SVB Financial Group will continue to work in cooperation with Silicon Valley Bridge Bank. We are committed to finding practical solutions to maximize recoverable value for the stakeholders of both entities.
The Chapter 11 filing follows reports that Silicon Valley Bank CEO Greg Becker is facing scrutiny for selling $3 million worth of SVB shares before the bank collapsed. The Daily Mail reported that Becker and his wife flew first class to their residence in Maui, Hawaii, after the bank failed. Becker, who had worked at SVB for more than 30 years, was fired by US President Joe Biden when the FDIC took over, along with SVB’s top lieutenants.
What impact do you think the bankruptcy filing of SVB Financial Group will have on the future of Silicon Valley Bank? Share your thoughts on this topic in the comments section below.
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