SVB Financial Group Files for Bankruptcy After US Authorities Seize Assets
SVB Financial Group, the parent of US lender Silicon Valley Bank, has filed for bankruptcy nearly a week after US authorities seized the bank's assets following a run on deposits. In the bankruptcy documents, the parent company of the bank listed that it had between one thousand and five thousand creditors. Chapter 11 bankruptcy is often referred to as “reorganizational” bankruptcy because it is intended to help a company regain financial stability.
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. Led by their longstanding and independent leadership teams, SVB Capital and SVB Securities remain operational and continue to provide services to clients.
To this end, SVB Financial Group said it intends to use the court-supervised process to evaluate strategic alternatives for SVB Capital, SVB Securities, and the Company's other assets and investments. Centerview Partners LLC is helping the restructuring committee in the strategic alternatives process that has been started and has sparked a lot of interest.
SVB Financial Group stated that they are still exploring “strategic alternatives” for the funds and GP entities under both SVB Securities and SVB Capital, which are not mentioned in the filing.
Today, SVB finished the sale of a large part of its securities portfolio that was available for sale. In the first quarter of 2023, SVB is projected to incur an after tax loss of approximately $1.8 billion as a result of the sale of approximately $21 billion in securities.
SVB (SIVB) has planned to give the underwriters involved in the stock sale an option to purchase up to an extra $187.5M worth of stock. SVB (SIVB) signed an agreement with private equity firm General Atlantic to purchase $500M worth of stock at the same price that the stock was offered publicly, in a different transaction. The subscription agreement is dependent on the completion of the stock offering, and will close soon afterwards.
Silicon Valley Bank, as a California-chartered commercial bank and a member of the Federal Reserve system, is not eligible for bankruptcy and was instead placed into Federal Deposit Insurance Corp. receivership.
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1. “SVB's Parent Company Declares Bankruptcy While Tech Investors Return to the Failed Bank” Gizmodo, 17 Mar. 2023, https://gizmodo.com/svb-silicon-valley-bank-tech-companies-bankruptcy-1850236612
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