The parent company of Silicon Valley Bank, SVB Financial Group, has filed for Chapter 11 bankruptcy protection in the United States to preserve value, the company said in a press release on 17 March.
According to the announcement, SVB Financial Group filed for a court-supervised reorganization in the U.S. Bankruptcy Court for the Southern District of New York. The company noted that the funds of its venture capital arm SVB Capital, broker dealer SVB Securities, and those of general partner entities were not included in the Chapter 11 bankruptcy filing. SVB Financial Group’s chief restructuring officer, William Kosturos, said in a statement:
“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.”
The company has estimated that it has around $2.2 billion in liquidity, in addition to “other valuable investment securities accounts and other assets”. SVB Group also has funded debt of about $3.3 billion in aggregate principal amount of unsecured notes, which are “only recourse” to SVB Group, and $3.7 billion of preferred equity outstanding.
SVB Group also stressed that it is no longer affiliated with Silicon Valley Bank (SVB) — which was shut down by regulators last week — or the bank’s private banking and wealth manager SVB Private. The collapse of SVB affected not only the traditional banking world, but also the cryptocurrency industry, with the USDC stablecoin losing its peg to the U.S. dollar after Circle revealed it could not withdraw $3.3 billion of the USDC reserve from SVB. The stablecoin recovered after Circle found a new banking partner.