• Silicon Valley Bank’s parent firm, SVB Financial Group, has filed for bankruptcy protection.
• The filing was submitted in the Southern District of New York to explore strategic alternatives as determined by a board-appointed restructuring team.
• Customers of Silicon Valley Bank will receive funds from the FDIC and the Biden administration and U.S Treasury.
Silicon Valley Bank Parent Firm Files for Bankruptcy Protection
SVB Financial Group, the parent company of Silicon Valley Bank, has filed for bankruptcy protection according to a press release on March 17th. The voluntary filing was submitted in the Southern District of New York in order to explore strategic alternatives as determined by a board-appointed restructuring team.
Strategic Alternatives
The bankruptcy case aims to preserve company value with $2.2 billion of liquidity, $3.3. billion of debt in aggregate principal amount of unsecured notes, and $3.7 billion of outstanding preferred equity. Joele Frank, a company known for its involvement in shareholder activism claims is involved in the case and any sale arranged must be approved in court before it is executed.
Customers Will Receive Funds Elsewhere
Silicon Valley Bank halted operations on March 10th after announcing plans to over $2 billion of funds leading to a weekend bank run resulting in customers not receiving access to their funds from this bank anymore but instead they will receive funds elsewhere such as from the Federal Deposit Insurance Corporation (FDIC) which will provide customers with the insured portion of their funds along with an emergency plan from the Biden administration and U.S Treasury providing additional support where needed for customers affected by this closure.
Other Services Will Continue
Though Silicon Valley Bank has failed, SVB’s other services — SVB Capital and SVB Securities — will continue to provide services as normal but are no longer associated with Silicon Valley Bank due to its closure and filing for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code .
Conclusion
The filing from SVB Financial Group serves as an attempt at preserving company value while also allowing customers affected by this closing access to their rightful funds via different sources like FDIC or emergency plans through Biden Administration or US Treasury Department while also allowing other services related to SVB such as SVB Capital and SVB Securities continue providing services despite its parent companies’ failure