SVB Financial Group Files for Chapter 11 Bankruptcy Protection to ‘Preserve’ Firm’s Value – Bitcoin News
On March 17, 2023, SVB Financial Group, the parent company of Silicon Valley Bank, filed for Chapter 11 bankruptcy protection in the Southern District of New York. The company stated that it is no longer associated with Silicon Valley Bank (SVB) after the Federal Deposit Insurance Corporation (FDIC) placed it into receivership last week.
3 SVB Entities Unaffected by Bankruptcy Filing; CEO Faces Scrutiny for Share Sale Before Silicon Valley Bank Collapse
On Friday, SVB Financial Group released a press release detailing its voluntary petition for a court-supervised reorganization under Chapter 11 bankruptcy protection. The announcement stated that the purpose of the filing is to preserve the remaining value of the company. The bankruptcy filing does not involve three entities, including the FDIC-operated bridge bank Silicon Valley Bank, N.A., SVB Securities, and SVB Capital’s funds.
The financial institution’s three verticals are still operating as they were before SVB was placed into FDIC receivership. SVB Financial Group stated that it holds “approximately $2.2 billion of liquidity” and has funded debt of “approximately $3.3 billion.” The financial company also has $3.7 billion of outstanding preferred equity, which will be utilized to evaluate strategic alternatives, as per the firm’s explanation.
“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,” the chief restructuring officer for SVB Financial Group, William Kosturos, said in a statement. “SVB Capital and SVB Securities continue to operate and serve clients, led by their longstanding and independent leadership teams.” Kosturos continued:
SVB Financial Group will continue to work cooperatively with Silicon Valley Bridge Bank. We are committed to finding practical solutions to maximize the recoverable value for stakeholders of both entities.
The filing for Chapter 11 follows reports that Silicon Valley Bank CEO Greg Becker faces scrutiny for selling $3 million worth of SVB shares prior to the bank’s collapse. The Daily Mail reported that Becker and his wife flew first class to their residence in Maui, Hawaii after the bank failed. Becker, who had worked at SVB for over 30 years, was fired by U.S. president Joe Biden when the FDIC took over, along with SVB’s top lieutenants.
What impact do you think SVB Financial Group’s bankruptcy filing will have on the future of Silicon Valley Bank? Share your thoughts about this subject in the comments section below.
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