Silicon Valley Bank’s holding company files for Chapter 11 bankruptcy protection in NY

SVB Financial Group, the parent company of Silicon Valley Bank, has filed for Chapter 11 bankruptcy protection in a New York court after the bank went bankrupt last week, sparking a world of tech startups.

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The fund and general partner entities of SVB Securities and SVB Capital are not included in the Chapter 11 filing and will continue to operate normally as the company explores “strategic alternatives” for these businesses, the company said in a statement.

SVB Capital is the failed venture capital arm of the bank, managing $9.5 billion with large investments in top Silicon Valley firms including Sequoia Capital, Andreessen Horowitz and Ribbit Capital. information reported by, SVB Securities is an investment bank that specializes in health care and technology.

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Silicon Valley Bank, NA, the new entity created by the Federal Deposit Insurance Corporation (FDIC) following the collapse of SVB, is no longer affiliated with SVB Financial Group and is not included in the Chapter 11 filing.

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The filing was made with the US Bankruptcy Court for the Southern District of New York.

SVB Financial Group said it had about $2.2 billion in liquidity at the time of the filing. Its funded debt accounts for approximately $3.3 billion in total principal amount of unsecured notes, and the company has $3.7 billion of preferred equity outstanding.

William Kosturos, Chief Restructuring Officer of SVB Financial Group, said, “The Chapter 11 process will allow SVB Financial Group to preserve value as it evaluates strategic options for its valued businesses and assets, particularly SVB Capital and SVB Securities ” “SVB Capital and SVB Securities continue to operate and serve clients under the leadership of their long-standing and independent leadership teams.”

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“SVB Financial Group will continue to work closely with Silicon Valley Bridge Bank,” Kosturos continued. “We remain committed to finding workable solutions to maximize realizable value for the stakeholders of both entities.”

The Silicon Valley bank, which primarily serves tech startups, was the nation’s 16th largest when it was shut down by California regulators on March 10. The FDIC took over the bank’s operations following a liquidity crisis as depositors rushed to withdraw their money amid panic over the bank’s health. It was the second largest bank failure in United States history and the largest since the collapse of Washington Mutual in 2008.

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Days before its collapse, SVB disclosed huge losses, causing its share price to drop by 60%. Most of SVB’s clients had deposits that exceed the FDIC’s $250,000 protection limit, which could cause hundreds of startup companies to lose access to their money and be unable to make payroll.

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The Treasury Department, the Federal Reserve and the FDIC announced a plan on Sunday to ensure that SVB customers will be able to access all of their funds even beyond the $250,000 limit. Critics have called the move a “bailout”, but government officials dispute that characterization, and financial analysts have noted that depositors, not SVB itself, are benefiting from the government’s action.

Fox Business’ Brec Dumas contributed to this report.