SVB Financial, the holding company for Silicon Valley Bank and other subsidiaries, had trading halted and was taken over by regulators last week. Today, the company announced that it had officially filed for Chapter 11 bankruptcy protection in the US Bankruptcy Court for the Southern District of New York.
This means that SVB Financial will be able to pursue its plans to sell off SVB Securities, SVB Capital, and other assets, as well as restart operations if it is granted permission by the courts to do so.
SVB Financial is also revealing some of the holding firm's financial details as part of this procedure. The holding company was worth about $12 billion until a run on deposits last Friday, Mar. 10, saw its stock price plunging. Trading was suspended as the market capitalization dropped to around $6 billion.
Financial Report
According to TechCrunch, the company estimates its liquidity at $2.2 billion. SVB Financial Group is the only beneficiary of the roughly $3.3 billion in "aggregate principal amount of unsecured notes," which have no recourse against SVB Capital or SVB Securities.
There is also $3.7 billion of preferred stock outstanding at SVB Financial Group, the report said.
"SVB Financial Group intends to use the court-supervised process to evaluate strategic alternatives for SVB Capital, SVB Securities and the Company's other assets and investments," the company said in a statement.
A five-person restructuring committee is steering the ship here, with Centerview Partners LLC lending a hand. It was also stated that any selling procedure would be handled via the Chapter 11 petition and would need court permission.
The file also detailed the progress made in selling off former company property.
In the next few days, further paperwork related to the Bankruptcy Court case will be submitted.
Business Operations
Several delays have been in the regulatory-supervised sale of SVB's banking sector, but the company is reporting strong interest in SVB Securities and SVB Capital. As these two organizations are distinct legal entities, they are excluded from the Chapter 11 petition. They have both been operating normally this week while simultaneously being shown to prospective buyers.
"The Chapter 11 process will enable SVB Financial Group to protect value while it considers strategic options for its valued companies and assets, particularly SVB Capital and SVB Securities," said
William Kosturos, Chief Restructuring Officer for SVB Financial Group, said that the Chapter 11 process will enable the corporation to protect value while considering strategic options for its valued companies and assets, particularly SVB Capital and SVB Securities.
"SVB Capital and SVB Securities continue to operate and serve clients, led by their longstanding and independent leadership teams," he assured.
In addition to cash and stakes in SVB Capital and SVB Securities, the group said it has additional important investment securities accounts and other assets for which it is also evaluating strategic options.
