SVB Financial Group, the former parent company of the collapsed Silicon Valley Bank, filed for Chapter 11 protection on Friday in New York bankruptcy court.
SVB Financial Group’s filing for Chapter 11 protection on Friday is the largest bankruptcy filing following a bank failure since Washington Mutual Inc. in 2008. Silicon Valley Bank collapsed last week and was SVB Financial’s primary business.
The Wall Street Journal noted that the Chapter 11 petition names asset managers Vanguard Group, BlackRock Inc., and State Street Corp. for holding more than 5 percent of its voting securities. SVB Financial also said it had $3.3 billion in unsecured debt and $3.7 billion in stock, which would be wiped out in bankruptcy.
Silicon Valley Bank was not included in Friday’s bankruptcy filing. Additionally, the venture capital company SVB Capital and broker-dealer business SVB Securities were not in the bankruptcy filing and would remain operational, according to the Journal.
Last week, Silicon Valley Bank collapsed when panicked customers suddenly withdrew tens of billions of dollars after it announced a loss of approximately $1.8 billion from selling its investments in U.S. treasuries and mortgage-backed securities. Ultimately, regulators shut Silicon Valley Bank down, and the Federal Deposit Insurance Corporation (FDIC) took control of the bank and said they would protect insured deposits.
On Sunday, the U.S. Treasury, the Federal Reserve, and the FDIC announced that they would be taking “decisive actions to protect the U.S. economy by strengthening public confidence in [the U.S.] banking system” by effectively making deposits above the FDIC’s $250,000 limit available this past Monday. The bank failed to be auctioned off last weekend after none of the largest U.S. banks bid, but there is supposed to be another attempt at auction the bank off on Friday, according to multiple reports.
SVB Financial Group said that Silicon Valley Bank and SVB Private are no longer affiliated with the parent company. Silicon Valley Bank is now operating as Silicon Valley Bridge Bank N.A. under the control of the FDIC, the Journal noted.
William Kosturos, chief restructuring officer for SVB Financial Group, said, “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.”
“SVB Capital and SVB Securities continue to operate and serve clients, led by their longstanding and independent leadership teams,” he added.
After the bank’s collapse, it was revealed that there was no chief risk officer (CRO) for nine months before the collapse. And during that time, before Kim Olson was bought on as CRO with “thirty years of financial services experience,” the United Kingdom-based head of risk for Europe, the Middle East, and Africa appeared to have focused on pro-diversity initiatives over her actual role.
Jacob Bliss is a reporter for Breitbart News. Write to him at firstname.lastname@example.org or follow him on Twitter @JacobMBliss.
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