SVB Financial Group Declares Insolvency Under Chapter 11

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Last Updated on March 17, 2023 by Bitfinsider

Troubled To protect its assets, SVB Financial Group voluntarily petitioned the US Bankruptcy judicial for a Chapter 11 reorganization under judicial supervision.

The funds of SVB Capital, its broker-dealer SVB Securities, and the general partner companies’ funds are not subject to the bankruptcy proceedings, according to a statement made by SVB on March 17. While SVB Financial Group continues to investigate strategic alternatives for its companies, the entities will carry on as usual.

Additionally, SVB Financial Group made clear that it was no longer associated with Silicon Valley Bank N.A. or SVB Private, the bank’s private banking and asset management division. Silicon Valley Bridge Bank, N.A., the bank’s successor, is not a party to the Chapter 11 case and is managed by the Federal Deposit Insurance Corporation (FDIC).

SVB Group estimates that the company has $2.2 billion in cash assets. The company has “other valuable investment securities accounts and other assets” in addition to cash and its stakes in SVB Capital and SVB Securities, for which it is also considering strategic alternatives.

The statement states that the approximately $3.3 billion in total principal amount of unsecured notes that make up SVB Group’s funded debt have “only recourse to SVB Financial Group” and have no bearing on SVB Capital or SVB Securities. Additionally, SVB Group owns $3.7 billion in preferred shares.

The court-supervised procedure will be used by SVB Group to assess strategic options for SVB Capital, SVB Securities, and other assets, according to William Kosturos, chief restructuring officer of SVB Group.

Kosturos emphasized that SVB Capital and SVB Securities will continue to run independently and provide customer service.

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