The parent business of Silicon Valley Bank filed for bankruptcy after regulators seized the company’s banking division as concern spread among its long-standing clientele of tech startups.
In a Chapter 11 petition submitted in New York, SVB Financial Group listed assets and liabilities totaling up to $10 billion each.
Silicon Valley Bank is not eligible for bankruptcy because it is a commercial bank with a charter from the State of California and is a member of the Federal Reserve system, so it is now under the control of the Federal Deposit Insurance Corporation. But, to secure its remaining assets and begin working on paying back creditors, including bondholders, its parent firm is permitted to file.
According to a statement, the venture capital arm SVB Capital and broker-dealer SVB Securities aren’t mentioned in the filing.
According to the FDIC, with nearly $209 billion in total assets as of the end of last year, the Santa Clara, California-based SVB is the largest bank to fail in more than ten years. It is also the second-largest bank to be placed under receivership by the agency, just after Washington Mutual Inc. collapsed in 2008.
After Peter Thiel’s Founders Fund and other prominent venture capital firms encouraged their portfolio companies to withdraw cash from the bank in March, anxiety in the tech community increased. The advice was given the day after the parent business of the bank declared it would attempt to raise more than $2 billion in response to a large loss on its portfolio.
According to a statement from the bank’s 20th anniversary, Bill Biggerstaff and Robert Medearis’ poker game resulted in the founding of Silicon Valley Bank in 1983. The company has focused on offering financial services to tech entrepreneurs since its founding.
According to regulatory documents, the parent firm that is now bankrupt had around $2.3 billion in cash, $500 million worth of investment securities, and $475 million worth of other assets as of December 31. Its long-term debt at the time was around $3.4 billion.
The case is Silicon Valley Bank Financial Group, 23-10367, U.S. Bankruptcy Court for the Southern District of New York.