The parent company of the seized Silicon Valley Bank is filing for bankruptcy protection. Here’s everything you need to know.
SVB Financial Group files for bankruptcy protection
The SVB Financial group along with its CEO and CFO were targeted in a class action lawsuit. The lawsuit claimed the company did not disclose the risks of the effects future interest rate hikes would have. The SVB Financial Group is no longer affiliated with the bank following the seizure. The bank’s collapse was the second biggest bank failure in US history since the 2008 debacle. Silicon Valley Bridge Bank, the bank’s successor is running under the Federal Deposit Insurance Corp (FDIC)’s jurisdiction.
“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,” stated William Kosturos. Kosturos is the Chief Restructuring Officer for SVB Financial Group.
What does this mean?
Since the FDCI is running the bank now, SVB Capital and its partner entities are not included in the Chapter 11 filing’s bankruptcy protection. Hence, they can continue operating normally. The funded debt for SVB Financial Group is around $3.3 billion in terms of the aggregate principal amount of unsecured notes. Additionally, there are no claims against SVB Securities or Capital.
The parent group has about $3.7 billion of preferred equity outstanding. As per their estimates, it has a liquidity of about $2.2 billion. The California-based company also revealed the presence of other assets and valuable investment securities accounts that they are exploring options. The shuttering of SVB in California and Signature Bank in New York is reviving memories of the 2008 financial crisis.
