SVB Financial Group, the former parent company of Silicon Valley Bankthe lender that was seized by regulators last week after a devastating run on deposits, declared bankrupt on Friday.
The move would place SVB Financial, which owns businesses other than Silicon Valley Bank, in legal proceedings as it will auction off units that include investment manager SVB Capital and stock brokerage firm SVB. Those units continue to operate and were not part of the bankruptcy filing.
The bankruptcy process would be separate from asset sales led by the Federal Deposit Insurance Corporation to pay Silicon Valley Bank depositors. SVB Financial said in a statement that it “believes it has approximately $2.2 billion of liquidity.” The company had about $3.3 billion in outstanding debt and a class of stock worth $3.7 billion.
The FDIC took over Silicon Valley Bank, a 40-year-old lender based in Santa Clara, California, last Friday. The sixteenth largest bank in the country, Silicon Valley Bank was one of the most prominent lenders in the world of tech startups. Its bankruptcy is the second largest in US history and the largest since the 2008 financial crisis. The FDIC She has had troubles find a buyer for the bank.
The bankruptcy filing sets up a battle between SVB Financial’s creditors and the FDIC. Both parties are likely to clamor for the profits that SVB Financial generates through the sale of its various businesses.