SVB Financial Group, the company that owns the failed Silicon Valley Bank, has filed for Chapter 11 bankruptcy protection to seek buyers for its assets. The news came a week after its former unit, Silicon Valley Bank, was taken over by the US government.
The defunct Silicon Valley Bank was not included in the bankruptcy filing in New York on Friday. The venture capital company SVB Capital and the broker-dealer business SVB Securities are not included in the Chapter 11 proceedings.
In a statement today, SVB Financial Group said it has $2.2 billion of liquidity. The company had $209 billion in assets at the end of last year.
William Kosturos, chief restructuring officer for SVB Financial Group, said in a statement that the Chapter 11 process will allow SVB Financial Group to preserve value as it evaluates strategic alternatives for its prized businesses and assets, including SVB Capital and SVB Securities.
He said SVB Capital and SVB Securities continue to serve clients, led by their longstanding and independent leadership teams. SVB Financial said it had $3.3 billion in debt and $3.7 billion in stock that could be wiped out in the bankruptcy.
The sudden collapse of Silicon Valley Bank SVB was a surprise for many in the tech industry. The collapse of the company caused panic for thousands of startups and venture capital firms. Within 48 hours a panic induced by the venture capital community that SVB was created to serve and cared for ended the bank's 40 year run.
After a 40-year run, the bank ceased operations on Friday, making it the largest banking failure since the 2008 financial crisis and the second-largest ever. The bank was taken over by the US regulators on the same day. Half of the US venture backed startups did business at the bank, and the broader tech ecosystem will be affected by the unraveling at SVB.
On Friday, venture capital firms urged tech startups and companies to move money out of the Silicon Valley Bank. The trading of SVB Financial Group's shares, the holding company of Silicon Valley Bank, was suspended on Friday due to a drop in the pre-market session. The bank was in a rush to raise new funds because of the steep decline.
Silicon Valley Bank SVB was founded in 1983 and is headquartered in Santa Clara, California. It serves the technology, life science, and venture capital industries. The bank offers a wide range of financial services, including commercial banking, investment banking, and asset management, to companies in the innovation sector.