Parent company of Silicon Valley Bank files for bankruptcy
NEW YORK –
The mother or father of Silicon Valley Bank filed for Chapter 11 chapter every week after the tech-focused financial institution failed and was seized by the U.S. authorities.
The submitting from SVB Financial Group on Friday isn’t a shock, with a lot of the corporate now underneath the management of U.S. banking regulators. During the 2008 monetary disaster, the mother or father firms of failed banks Washington Mutual and IndyMac — filed for chapter safety within the days after their banking operations failed.
Also, Silicon Valley Bank together with its CEO and its chief monetary officer had been focused this week in a category motion lawsuit that claims the corporate did not disclose the dangers that future rate of interest will increase would have on its business.
SVB Financial Group is now not affiliated with Silicon Valley Bank after its seizure by the Federal Deposit Insurance Corporation. The financial institution’s successor, Silicon Valley Bridge Bank, is being run underneath the jurisdiction of the FDIC and isn’t included within the Chapter 11 submitting.
The chapter filling by SVB Financial Group will create a authorized battle over the financial institution’s remaining property, between the collectors of the holding firm and financial institution regulators who wish to make depositors entire. SVB Financial Group believes it has roughly US$2.2 billion of liquidity. It additionally stated it additionally has different worthwhile funding securities accounts and different property which are being thought-about on the market.
The Wall Street Journal reported {that a} group of distressed debt buyers — principally hedge funds — purchased up the bonds of Silicon Valley Bank’s holding firm in a wager that that there will probably be some proceeds for bondholders after the chapter course of is accomplished.
“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,” William Kosturos, Chief Restructuring Officer for SVB Financial Group, stated in a ready assertion Friday.
SVB Capital is the corporate’s enterprise capital and personal credit score fund. SVB Securities is a regulated broker-dealer. Both proceed to function and have sources of funding, the corporate stated.
The shuttering of Silicon Valley Bank final Friday and of New York’s Signature Bank two days later has revived dangerous reminiscences of the monetary disaster that plunged the United States into the Great Recession about 15 years in the past.
Over the weekend the federal authorities, decided to revive public confidence within the banking system, moved to guard all of the banks’ deposits, even people who exceeded the FDIC’s US$250,000 restrict per particular person account.
