SVB Financial Group announced Friday it was filing for chapter 11 bankruptcy to reorganize under court supervision.
The group announced that SVB Securities and SVB Capital’s funds and general partner entities would not be included in the chapter 11 bankruptcy.
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“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. SVB Capital and SVB Securities continue to operate and serve clients, led by their longstanding and independent leadership teams,” William Kosturos, chief restructuring officer for SVB Financial Group, said in a statement.
“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,” he added.
The company says it believes it has $2.2 billion of liquidity, along with cash and interests in SVB Capital and SVB Securities. The financial group also says it has “approximately $3.3 billion in aggregate principal amount of unsecured notes,” along with $3.7 billion of preferred equity outstanding.
SVB Financial Group says once it begins filing to bankruptcy court it will ask to be allowed to continue “operations of SVB Financial Group in the ordinary course of business as soon as a hearing can be scheduled.”
The bankruptcy filing comes a week after Silicon Valley Bank was seized by state regulators. Silicon Valley Bank in now a separate entity from the SVB Financial Group and is now operating under the FDIC’s jurisdiction, per the release.
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The collapse of Silicon Valley Bank last week led to a week of uncertainty for several regional banks and some larger lenders. First Republic Bank, a regional bank, and Credit Suisse, a Swiss lender, both accepted rescue packages from large banks to sure up their liquidity.
The Biden administration has maintained throughout the week that “the banking system is safe,” while also insuring that it would guarantee all deposits in Silicon Valley Bank, including those beyond the federally insured ceiling of $250,000.
