Parent of Silicon Valley Bank seeks bankruptcy protection
SANTA CLARA, CALIFORNIA - MARCH 10: A worker (C) tells people that the Silicon Valley Bank (SVB) headquarters is closed on March 10, 2023 in Santa Clara, California. Silicon Valley Bank was shut down on Friday morning by California regulators and was
SANTA CLARA, Calif. - The parent of Silicon Valley Bank, seized last week by the U.S., is filing for Chapter 11 bankruptcy protection.
SVB Financial Group, along with its CEO and its chief financial officer, were targeted this week in a class action lawsuit that claims the company didn’t disclose the risks that future interest rate increases would have on its business.
SVB Financial Group is no longer affiliated with Silicon Valley Bank after its seizure by the Federal Deposit Insurance Corp. Its collapse was the second biggest bank failure in U.S. history after the demise of Washington Mutual in 2008.
The bank’s successor, Silicon Valley Bridge Bank, is being run under the jurisdiction of the FDIC and is not included in the Chapter 11 filing.
"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," William Kosturos, Chief Restructuring Officer for SVB Financial Group, said in a statement on Friday.
Regulated broker-dealer SVB Securities and funds of venture capital and private credit fund platform SVB Capital and its general partner entities are not included in the Chapter 11 filing and continue to operate normally.
SVB Financial Group believes it has approximately $2.2 billion of liquidity. The Santa Clara, California-based company said it also has other valuable investment securities accounts and other assets that it’s exploring strategic options for.
The shuttering of Silicon Valley Bank last Friday and of New York-based Signature Bank two days later has revived bad memories of the financial crisis that plunged the United States into the Great Recession of 2007-2009.
Over the weekend the federal government, determined to restore public confidence in the banking system, moved to protect all the banks’ deposits, even those that exceeded the FDIC’s $250,000 limit per individual account.