By MICHELLE CHAPMAN (AP Business Writer)
The mother or father firm of Silicon Valley Bank filed for Chapter 11 chapter safety Friday, per week after the tech-focused financial institution failed in a sudden collapse that set off fears of wider issues within the international banking system.
The submitting from SVB Financial Group was broadly anticipated, with a lot of the corporate now underneath the management of banking regulators. The financial institution was seized final week by the federal authorities.
In different developments, the financial institution, its CEO and its chief monetary officer have been focused in a category motion lawsuit that claims the corporate didn’t disclose the dangers that future rate of interest will increase would have on its enterprise.
SVB Financial Group is not affiliated with Silicon Valley Bank after the financial institution was taken over by the Federal Deposit Insurance Corporation. The financial institution’s successor, Silicon Valley Bridge Bank, was not included within the Chapter 11 submitting.
The chapter submitting by SVB Financial Group creates a authorized battle over the financial institution’s remaining belongings between the collectors of the holding firm and regulators who wish to make depositors entire.
SVB Financial Group believes it has roughly $2.2 billion of liquidity. It additionally stated it has different invaluable securities and belongings which are being thought-about on the market.
“The Chapter 11 process will allow SVB Financial Group to preserve value as it evaluates strategic alternatives for its prized businesses and assets,” William Kosturos, chief restructuring officer for SVB Financial Group, stated in an announcement.
Those belongings embody SVB Capital, the corporate’s enterprise capital and personal credit score fund, and SVB Securities, a regulated broker-dealer. Both proceed to function and have sources of funding, the corporate stated.
The Wall Street Journal reported {that a} group of distressed debt traders — principally hedge funds — purchased the bonds of Silicon Valley Bank’s holding firm in a wager that that there might be some proceeds for bondholders after the chapter course of is accomplished.
The shuttering of Silicon Valley Bank on March 10 and of New York’s Signature Bank two days later revived recollections of the monetary disaster that plunged the United States into the Great Recession nearly 15 years in the past.
Determined to revive public confidence within the banking system, the federal authorities moved final weekend to guard all of the banks’ deposits, even those who exceeded the FDIC’s $250,000 restrict per particular person account.
During the 2008 disaster, the mother or father corporations of failed banks Washington Mutual and IndyMac additionally filed for chapter safety within the days after their operations failed.
Source: www.bostonherald.com”
