On March 17, 2023, Silicon Valley Bank’s parent company, SVB Financial Group, filed for Chapter 11 in the Southern District of New York. The company said it is no longer involved with the Federal Deposit Insurance Corporation (FDIC) after the FDIC placed Silicon Valley Bank (SVB) in receivership last week.
Three SVB entities were unaffected by the bankruptcy filing, while the CEO faced criticism
for selling shares prior to Silicon Valley Bank’s collapse.
On Friday, SVB Financial Group issued apress releasedetailing its voluntary petition for court-supervised reorganization under Chapter 11. According to the announcement, the purpose of the petition is to preserve the company’s remaining value. The bankruptcy filing does not include three entities, including the FDIC-operated bridge banks Silicon Valley Bank, N.A., SVB Securities, and SVB Capital funds.
The three verticals of the financial institution are said to operate as they did before SVB was placed in receivership by the FDIC, with SVB Financial Group stating that it holds “approximately $2.2 billion in liquidity” and has raised “approximately $3.3 billion in debt.” The financial firm has also issued $3.7 billion in preferred stock, which, according to the company, will be used to evaluate strategic alternatives.
In a statement, William Costolo, chief restructuring officer of SVB Financial Group, said, “SVB Financial Group will use the Chapter 11 filing to help it evaluate its strategic options for its valued businesses and assets, particularly SVB Capital and SVB Securities. value can be preserved,” he stated. Kosturos continued, “SVB Capital and SVB Securities will continue to be managed and serve its clients by an independent leadership team with many years of experience. Kosturos continued.
SVB Financial Group will continue to work cooperatively with Silicon Valley Bridge Bank. We are committed to finding realistic solutions to maximize recoverable value for the stakeholders of both companies.
The Chapter 11 filing follows reports that Silicon Valley Bank CEO Greg Becker is under scrutiny for selling $3 million worth of SVB stock before the bank’s collapse. The Daily Mailreported that Becker and his wife flew first class to their Maui, Hawaii residence after the bank’s collapse; Becker, who had worked at SVB for more than 30 years, along with top SVB executives when the FDIC took over, were fired by US President Joe Biden was fired by the FDIC.
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