Silicon Valley Bank owners file for Chapter 11
SVB Financial Group filed for Chapter 11 bankruptcy protection on Friday, just days after U.S. regulators seized control of the beleaguered Silicon Valley Bank.
The entity that once owned SVB listed assets and liabilities of up to $10 billion each in the petition, filed in the Southern District of New York.
“The Chapter 11 process will allow SVB Financial Group to preserve value as it evaluates strategic alternatives for its prized businesses and assets, especially SVB Capital and SVB Securities,” William Kosturos, Chief Restructuring Officer for SVB Financial Group, said in a statement on Friday.
“SVB Capital and SVB Securities continue to operate and serve clients, led by their longstanding and independent leadership teams,” he added.
SVB Financial Group lost its affiliation with Silicon Valley Bank when it was seized by the Federal Deposit Insurance Corp on March 10. Trading of the company’s stock has been halted since, and a bankruptcy filing was expected to follow.
Its collapse marked the second largest bank failure in U.S. history since Washington Mutual failed during the financial crisis of 2008. It also came just days before the shuttering of New York-based Signature Bank, with the state Department of Financial Services seizing its assets on Sunday.
The move to begin bankruptcy proceedings comes after the Santa Clara, Calif. company said it was working to explore strategic alternatives for its businesses including, SVB Capital and SVB Securities. In another bid to shore up confidence, the federal government over the weekend moved to protect all the banks’ deposits, even those that exceeded the FDIC’s $250,000 limit per individual account.
SVB Financial Group believes it has approximately $2.2 billion of liquidity as well as “other valuable investment securities accounts and other assets for which it is also exploring strategic alternatives,” according to the press release. It also noted a funded debt of $3.3 billion “in aggregate principal amount of unsecured notes,” which are only recourse to SVB Financial Group “and have no claim against SVB Capital or SVB Securities.”