SVB’s financial files for Chapter 11 bankruptcy protection

The parent company of Silicon Valley Bank filed for bankruptcy, facilitating the sale of its remaining assets after federal regulators seized the technology-focused bank at the heart of its business.

SVB Financial Group filed for Chapter 11 protection in New York bankruptcy court on Friday, the largest bank failure since Washington Mutual. Inc.
in the year 2008.

Silicon Valley Bank, a technology-focused lender and the main business of SVB Financial, came before federal regulators after being crippled by depositor exits. The Federal Reserve moved to make depositors whole and calm markets, even as several other U.S. regional banks have had their credit ratings cut and depositors are pulling cash.

Silicon Valley Bank, now operating as Silicon Valley Bridge Bank NA under the supervision of the Federal Deposit Insurance Corp., is not part of the Chapter 11 filing.

Bankruptcy provides a court-supervised process to help a parent company find new owners for its business lines that are not under federal control. Its other businesses have included SVB Capital, an investment manager that oversees $9.5 billion in assets on behalf of outside investors, as well as investment bank SVB Securities and asset management firm SVB Private, according to securities filings.

Advertisement – Scroll to Continue

SVB Financial Group said in a statement on Friday that Silicon Valley Bank and SVB Private are no longer affiliated with the parent company.

William Kosturos, the parent company’s chief restructuring officer, said in a statement that he is working to find ways to maximize recoverable value for SVB Financial Group and Silicon Valley Bridge Bank stakeholders.

SVB Financial Group has announced the shares listed on the Nasdaq exchange, whose trading has been suspended since March 9. It also has more than $3 billion in bonds and nearly $4 billion in preferred stock that have traded at difficult levels. since the bank went into receivership.

Advertisement – Scroll to Continue

Hedge funds and other asset managers have bet on bonds issued by SVB Financial, even as U.S. government officials have warned that the bank’s investors are likely to be wiped out. A group of bondholders that includes Centerbridge Partners, Davidson Kempner Capital Management LP and Pacific Investment Management Co. is betting to raise proceeds from the sale of the company’s private wealth and other units, the Wall Street Journal reported.

The group of bondholders is being advised by financial adviser PJT Partners Inc. and law firm Davis Polk & Wardwell LLP, according to people familiar with the matter. SVB Financial is acting as financial advisor to Centerview Partners LLC, with Sullivan & Cromwell LLP as legal advisor and Alvarez & Marsal as its restructuring advisor, according to a company statement.

Friday’s bankruptcy filing could also help SVB Financial’s directors and officers gain immunity from any civil lawsuits that creditors or shareholders may seek against them over alleged corporate mismanagement.

When assets are sold through bankruptcy, the proceeds often go to creditors. However, investors are weighing the risk that SVB Financial may have to absorb Silicon Valley Bank’s losses, which have not been disclosed by regulators.

It is not uncommon for a holding company to file for bankruptcy after a bank it owns is placed in federal receivership. Washington Mutual filed for Chapter 11 protection after its subsidiary Washington Mutual Bank collapsed in 2008, the largest bank failure in U.S. history. Washington Mutual Bank was taken over by federal regulators and later sold to them

Advertisement – Scroll to Continue

JPMorgan Chase & Co.

Write to Alexander Saeedy at

Leave a Comment