SVB Financial, parent of Silicon Valley Bank files for bankruptcy protection

The parent company of Silicon Valley Bank filed for bankruptcy after regulators seized the company’s banking unit as concern spread among its long-standing clientele of tech startups. 

In a Chapter 11 petition filed in New York, SVB Financial Group listed assets and liabilities totalling up to $10 billion each, as per a Bloomberg report. 

Silicon Valley Bank was placed in Federal Deposit Insurance Corp. receivership because it is a commercial bank with a charter from the State of California and is a member of the Federal Reserve system rather than filing for bankruptcy. Yet, its parent company is allowed to do so in order to safeguard its remaining assets and begin working to pay back creditors, including bondholders. 

The venture capital arm of SVB Capital and the broker-dealer SVB Securities are not mentioned in the filing, a statement claims.

SVB, based in Santa Clara, California, had nearly $209 billion in assets as of the end of last year, making it the largest bank to collapse in more than ten years, according to the FDIC. Aside from Washington Mutual Inc., which collapsed in 2008, it is also the second-largest bank to be placed under receivership by the FDIC, as reported by Moneycontrol. 

ALSO WATCH | India startups have deposits worth $1 bn in SVB | Tech It Out

Tech industry concern increased in March after Peter Thiel’s Founders Fund and other prominent venture capital firms recommended their portfolio companies to withdraw cash from the bank. After suffering a substantial loss on its portfolio, the bank’s parent firm stated the following day that it would attempt to raise more than $2 billion. 

As per a statement from the bank’s 20th anniversary, Bill Biggerstaff and Robert Medearis’ poker game resulted in the founding of Silicon Valley Bank in 1983. The company has concentrated on providing financial services to tech startups ever since it was founded. 

The parent firm that is now insolvent had $475 million in other assets, $2.3 billion in cash, and $500 million in investment securities as of December 31. Its long-term debt at the time was around $3.4 billion. 

SVB Financial Group is the case; the case number is 23-10367; it is being heard in the Southern District of New York’s bankruptcy court.