SVB Financial Group, the parent company of Silicon Valley Bank, files for bankruptcy
SVB Financial Group, the company that owned the failed Silicon Valley Bank, has filed for Chapter 11 bankruptcy protection to seek buyers for its assets. The news comes just a week after its former unit Silicon Valley Bank was taken over by the US government.
The company disclosed that the defunct Silicon Valley Bank was not included in the bankruptcy filing in New York on Friday. Also excluded from the Chapter 11 proceedings are venture capital company SVB Capital and broker-dealer business SVB Securities, which will remain operational.
In a statement today, SVB Financial Group said it has about $2.2 billion of liquidity. Just at the of last year, the company had $209 billion in assets.
“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,” said William Kosturos, chief restructuring officer for SVB Financial Group, in a statement.
“SVB Capital and SVB Securities continue to operate and serve clients, led by their longstanding and independent leadership teams,” he added. SVB Financial said it had $3.3 billion in unsecured debt and $3.7 billion in stock that could get wiped out in the bankruptcy.
The sudden collapse of Silicon Valley Bank (SVB) was a surprise to many in the tech industry. The collapse sent panic waves to thousands of startups and venture capital firms. Within 48 hours, a panic induced by the very venture capital community that SVB was created to serve and cared for ended the bank’s40-year run.
After a 40-year run, the bank ceased operations on Friday, making it the largest banking failure since the 2008 financial crisis and the second-largest ever. On the same day, the US regulators seized control of the bank. The unraveling at SVB will have far-reaching implications for U.S. venture-backed startups, half of which did business at the bank, and also for the broader tech ecosystem.
On Friday, venture capital firms urged tech startups and companies in their portfolio companies to move money out of embattled lender Silicon Valley Bank. On Friday, the trading of SVB Financial Group’s shares, the holding company of Silicon Valley Bank, was suspended due to a significant drop in the pre-market session. The bank was in a rush to raise new funds amid this steep decline.
Founded in 1983 and headquartered in Santa Clara, California, Silicon Valley Bank (SVB) was a commercial bank that primarily serves the technology, life science, and venture capital industries. The bank offers a range of financial services, including commercial banking, investment banking, and asset management to companies in the innovation sector.