SVB Financial loses access to its records under FDIC

SVB Financial, the bankrupt parent company of Silicon Valley Bank, has lost access to its financial records after it was placed into receivership by the Federal Deposit Insurance Corporation FDIC, according to court documents filed in Manhattan on Sunday.

SVB Financial is looking at options, including possible bankruptcy sale, for its venture capital and investment banking businesses, which were not included in the FDIC's takeover of SVB. A breakdown in cooperation with the bridge bank set up to take over SVB's business has made it a difficult start to its Chapter 11 bankruptcy, according to a declaration filed by SVB Financial Chief Restructuring Officer William Kosturos in US bankruptcy court.

The new bank's employees have cut off access to a large portion of SVB Financial's books, records, files, electronic systems, and key employees, according to Kosturos, and SVB Financial has no employees of its own.

Kosturos said SVB Financial is working to re-establish access.

SVB Financial filed for bankruptcy protection on Friday, about a week after California banking regulators closed Silicon Valley Bank, the largest bank failure since the 2008 financial crisis.

The FDIC is trying to sell SVB and may seek a breakup of the failed lender.

The FDIC receivership removed SVB Financial's primary source of liquidity and most of its business infrastructure, as well as triggering defaults on SVB Financial's debt, forcing the company into bankruptcy, according to court documents.

SVB Financial's court filings indicated $19 billion in assets, $2.2 billion in cash and cash equivalents and $3.4 billion in liabilities. SVB Banking was seized by regulators and accounted for about $15.5 billion of SVB Financial's asset value.

According to Kosturos' declaration, SVB Capital, the venture capital and credit investment arm of the company, manages about $9.5 billion in other investors' money spread across 30 pooled investment funds.

Those investment funds include direct venture funds that invest in companies, funds-of- funds that invest in other venture capital funds, and debt funds that provide lending and other financing solutions to startups.

According to Kosturos' declaration, SVB Securities is an investment bank that provides financial services to healthcare and technology companies.

In its court filings on Sunday, SVB Financial also made several requests intended to continue the smooth operation of its business during its bankruptcy, such as asking for permission to keep its existing bank accounts and paying for services provided by SVB employees.