SVB Financial Group, the parent company of Silicon Valley Bank, has filed for bankruptcy protection, according to a press release from the company on March 17.
SVB files for reorganization
The announcement indicates that SVB Financial Group has voluntarily filed for a court-organized reorganization under Chapter 11 of the U.S. Bankruptcy Code.
The filing has been submitted in the Southern District of New York.
SVB Financial Group said that the legal process will allow it to explore strategic alternatives as determined by a board-appointed restructuring team made up of five members. It noted that its strategic alternatives process is already in progress and added that any sale that is arranged will need to be approved in court before it is executed.
The bankruptcy case aims to preserve company value. The company believes it has $2.2 billion of liquidity, $3.3. billion of debt in aggregate principal amount of unsecured notes, and $3.7 billion of outstanding preferred equity. Joele Frank, a company known for its involvement in shareholder activism claims, is involved in the case.
Though Silicon Valley Bank has failed, SVB’s other services — SVB Capital and SVB Securities — will continue to provide services. SVB Financial Group is no longer associated with the failed Silicon Valley Bank, according to the press release.
Customers will receive funds elsewhere
Silicon Valley Bank halted operations on March 10 as U.S. regulators closed the bank and took control of customer assets. The collapse occurred shortly after the company announced plans to over $2 billion of funds, leading to a weekend bank run. Circle and BlockFi were among the cryptocurrency companies affected by the bank’s failure.
While bankruptcy protection will help the company continue ordinary operations and potentially lead to a recovery, customers will regain access to their funds elsewhere.
The Federal Deposit Insurance Corporation (FDIC) will provide customers will the insured portion of their funds. Meanwhile, an emergency plan from the Biden administration and U.S. Treasury will provide customers with all other eligible funds.