SVB Financial Group Files for Bankruptcy with up to $10 Billion in Assets and Liabilities
Silicon Valley Bank, a technology-focused lender founded over a poker game in 1983, has filed for bankruptcy, with its parent company SVB Financial Group citing assets and liabilities of up to $10 billion each in a Chapter 11 petition filed in New York. SVB Securities and venture capital arm SVB Capital are not included in the filing.
Prior to the filing, SVB Financial Group completed the sale of substantially of its available for sale securities portfolio, selling approximately $21 billion of securities, resulting in an after tax loss of approximately $1.8 billion in the first quarter of 2023. The company also announced it intends to offer $1.25 billion of its common stock and $500 million of depositary shares, consisting of 10 million depositary shares each representing a 1/20th interest in a share of its Series F Mandatory Convertible Preferred Stock, in separate underwritten registered public offerings.
The company said it intends to use the net proceeds from the offerings for general corporate purposes and will grant (i) the underwriters in the common stock offering an option to purchase up to an additional $187.5 million of common stock and The underwriters of the Preferred Stock offering have an option to purchase up to an extra $75 million, or 1.5 million depositary shares, in the offering.
Because Silicon Valley Bank was a California-chartered commercial bank and part of the Federal Reserve system, it is not eligible for bankruptcy and had to be taken over by the Federal Deposit Insurance Corporation (FDIC). SVB Financial Group, however, is eligible to file for bankruptcy in order to protect its remaining assets and work on repaying creditors, including bondholders.
SVB Financial Group said it is no longer affiliated with Silicon Valley Bank or its private banking and wealth management unit, SVB Private, following the takeover. The company stated that Silicon Valley Bank is not part of the Chapter 11 filing.
The company also said it intends to use the court-supervised process to evaluate strategic alternatives for SVB Capital, SVB Securities and the Company’s other assets and investments. A five-member restructuring committee appointed by the SVB Financial Group Board of Directors is overseeing the process and Centerview Partners LLC is assisting the committee. The Chapter 11 proceeding will be utilized to carry out any sale process, which must be sanctioned by the court.
0. “Silicon Valley Bank’s Parent Company Files for Chapter 11 Bankruptcy Protection” The Wall Street Journal, 17 Mar. 2023, https://www.wsj.com/articles/silicon-valley-banks-failure-tips-parent-company-into-chapter-11-3553fd32?mod=markets_major_pos11
1. “SVB Financial Goes Bankrupt, Buying Time to Repay Creditors” Bloomberg, 17 Mar. 2023, https://www.bloomberg.com/news/articles/2023-03-17/svb-financial-group-files-for-chapter-11-bankruptcy-protection
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6. “SVB Financial files for Chapter 11 bankruptcy protection” Axios, 17 Mar. 2023, https://www.axios.com/2023/03/17/sbv-chapter-11
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