About a week after the U.S. Silicon Valley Bank (SVB) collapsed due to a massive deposit withdrawal, SVB Financial Group, its parent company, also filed for bankruptcy protection to the authorities.
According to the Associated Press on the 17th (local time), SVB Financial Group filed for bankruptcy protection under Article 11 of the Bankruptcy Act (Chapter 11) with the Southern Federal District Court in New York. SVB listed bankruptcies and liabilities worth $10 billion each in its application to the court.
SVB Financial said in a press release that its subsidiaries SVB Securities and SVB Capital are not currently included in the bankruptcy protection list and are considering strategic alternatives, including the sale of other assets, including the two companies.
Although SVB itself, part of the U.S. Federal Reserve System, is not eligible to file for bankruptcy, its parent company SVB Financial can file for bankruptcy to protect its remaining assets and repay creditors, Bloomberg reported.
The statement said SVB holds about $2.2 billion in liquidity and considers shares in SVB Capital and SVB Securities as assets. It also has about 3.3 billion dollars in outstanding debt.
“SVB Financial Group will continue to work with Silicon Valley Bridge Bank (SVBB),” William Costuros, SVB Financial Group’s chief restructuring officer, said in a statement. “We are committed to finding practical solutions to maximize recoverable value for our stakeholders.” SVBB is the new name of SVB, and the U.S. Federal Deposit Insurance Corporation (FDIC), SVB’s bankruptcy trustee, recently changed its name to SVBB.
Earlier on the 10th, the California Financial Protection and Innovation Administration closed SVB due to insufficient liquidity and insolvency and appointed the U.S. Federal Deposit Insurance Corporation (FDIC) as bankruptcy trustee. As a result, the relationship between SVB and its parent company SVB Financial has been settled.
After SVB bankruptcy, SVB Financial Group executives were sued collectively. SVB Financial Group shareholders filed a class action suit against Chief Executive Officer Greg Becker and Chief Financial Officer Daniel Beck in a federal court in San Jose, California, on the 13th. They argued that management did not disclose that rising interest rates could weaken the bank’s business base and put it in a more vulnerable situation than banks with other customer segments.