The parent company of Silicon Valley Bank, seized by the US last week, is filing for Chapter 11 bankruptcy protection.
SVB Financial Group, along with its CEO and Chief Financial Officer, came under attack this week in a class action lawsuit alleging that the company failed to disclose the risks future rate hikes would pose to its business.
SVB Financial Group Is Dead After Seizing Federal Deposit Insurance Corp. No Longer Affiliated With Silicon Valley Bank. The collapse was the second-largest bank collapse in U.S. history, after the 2008 collapse of Washington Mutual.
The bank’s successor, Silicon Valley Bridge Bank, falls under the jurisdiction of the FDIC and is not included in the Chapter 11 filing.
“The Chapter 11 process enables SVB Financial Group to preserve value while evaluating strategic alternatives for its valued businesses and assets, especially SVB Capital and SVB Securities,” said William Kosturos, Group Chief Restructuring Officer of SVB Financial , Friday in,” said one statement. .
Regulated broker-dealer SVB Securities and venture capital and personal lending platform SVB Capital and its general partners are not included in the Chapter 11 filing and will continue to operate normally.
SVB Financial Group’s funded debt is approximately $3.3 billion in unsecured debt securities. There is no claim against SVB Capital or SVB Securities. SVB Financial Group also has $3.7 billion in preferred stock outstanding.
SVB Financial Group believes it has approximately $2.2 billion in liquidity. The Santa Clara-based company said it is also exploring strategic options for other valuable investment portfolios and other assets it owns.
The closures of Silicon Valley Bank a week ago and New York-based Signature Bank on Sunday rekindled bad memories of the financial crisis that plunged the United States into the Great Recession of 2008.
Over the weekend, determined to restore public confidence in the banking system, the federal government took action to protect all bank deposits, even those that exceeded the FDIC limit of $250,000 per individual account.
Source: LA Times