SVB Financial files for Chapter 11 bankruptcy protection in the SDNY Bankruptcy Court and “believes it has approximately $2.2B of liquidity”
One week after trading was halted for SVB Financial and regulators took control of the holding company for Silicon Valley Bank and other subsidiaries …
TechCrunchIngrid Lunden
Context & Ripple Effects
The parent company’s filing follows the attempted capital raise and sale discussions, then an acute withdrawal episode in which investors and depositors sought to pull $42B from SVB. The reported $2.2B liquidity figure puts a stated resource level around the holding-company restructuring.
SVB Financial enters Chapter 11, placing the holding company’s restructuring and its stated $2.2B liquidity under bankruptcy-court oversight.
SVB Capital and SVB Securities are tied to a parent-company process distinct from the FDIC’s disposition of Silicon Valley Bank operations.
Second-order effects
The FDIC’s two-auction process makes prospective buyers assess SVB’s banking businesses separately from assets and claims handled in SVB Financial’s Chapter 11 case.
SVB Financial creditors and investors must look to the holding company’s estate rather than the FDIC sale process for the bank units.
Third-order effects
The paired proceedings illustrate how a bank failure can require separate federal resolution for insured-bank operations and bankruptcy administration for the parent company, fragmenting ownership, claims, and asset sales.
If this division becomes a recurring resolution pattern, financial groups with bank subsidiaries will face greater pressure to make parent-level assets and obligations separable from regulated-bank operations.
The trend: Bank-failure resolution is increasingly being split between rapid regulatory sales of banking operations and court-supervised restructurings of their holding companies.
Parts of SVB Financial are not included in the Chapter 11 — SVB Capital where there's a private credit unit Many assets are not drawing favor — loans to venture-backed firms are tricky https://www.bloomberg.com/...
some idle speculation about why a depositor bailout or direct, specific government assistance of First Republic may be difficult: the bank is explicitly designed to serve the wealthy (or at lest the affluent) https://www.grid.news/... https://twitter.com/...
The worst take on SVB is the so-called Moral Hazard of making depositors whole after the fact. The thinking here is that future bank managers will be more willing to do sloppy work if the only penalty for doing so is losing their jobs and being publicly humiliated and scorned.
@mavsfan0041 this was a big issue with SVB: their clients had to deposit the loans they got from them with them due to covenants https://www.bloomberg.com/... https://twitter.com/...
SVB Financial said it filed for chapter 11 bankruptcy in New York to “preserve value” as it continues to explore alternatives for its Capital and Securities units. https://twitter.com/...
SVB files chapter 11 bankruptcy: “....it has filed a voluntary petition for a court-supervised reorganization under Chapter 11 in the United States Bankruptcy Court for the Southern District of New York to preserve value” $SIVB https://twitter.com/...
The “believes” sticks a bit here... let's see what else comes out I guess! Still marvel at how quickly all this turned last week in the stampede. https://twitter.com/...
Wow, the SVB bankruptcy filing was written in a way to confuse. New holdco, which went Chapter 11, only includes Securities and VC units (release says they're excluded, but only the OPERATING units are excluded). The commercial bank/private aren't part at all. Owned by FDIC.