• Silicon Valley Bank parent company SVB Financial Group has filed for bankruptcy protection.
• The filing was made in the Southern District of New York and is intended to explore strategic alternatives and preserve company value.
• Though Silicon Valley Bank has failed, SVB Capital and SVB Securities will still operate and customers will receive their funds from the FDIC.
SVB Financial Group Files for Bankruptcy
SVB Financial Group, the parent company of Silicon Valley Bank, has filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code in the Southern District of New York on March 17th. The filing is intended to explore strategic alternatives for the company as well as preserve its value.
Restructuring Team Appointed
A board-appointed restructuring team made up of five members have been appointed to oversee any sale that is arranged during this process, which must be approved by a court before it can be executed. Joele Frank, a known shareholder activist firm, is also involved in this case.
Silicon Valley Bank Fails
Despite this filing, Silicon Valley Bank has failed; however, other services such as SVB Capital and SVB Securities will continue to provide services without being associated with the failed bank.
Funds Reallocated Elsewhere
Customers affected by the bank’s failure will regain access to their funds elsewhere such as through Federal Deposit Insurance Corporation (FDIC) which provides an insured portion or through Biden administration and U.S. Treasury emergency plans which provides additional funding options for those affected by the collapse of Silicon Valley Bank.
The bankruptcy case aims to preserve company value with $3 billion worth of debt in aggregate principal amount unsecured notes, $3 billion of outstanding preferred equity plus $2 billion worth of liquidity available while also providing customers with alternate funding sources outside of Silicon Valley Bank itself so they are not left out financially due to its collapse.