SVB Financial Group, the former parent company of Silicon Valley Bank, the lender that regulators seized last week after a devastating run on deposits, filed for bankruptcy on Friday.
The move would place SVB Financial, which owns other businesses aside from Silicon Valley Bank, into a court-led process, as it auctioned off units that include the investment manager SVB Capital and the brokerage firm SVB securities. Those units continue to operate and were not part of the bankruptcy filing.
The bankruptcy process would be separate from the sale of assets led by the Federal Deposit Insurance Corporation to repay Silicon Valley Bank’s 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 debt outstanding and a type of shares worth $3.7 billion.
The F.D.I.C. took over Silicon Valley Bank, a 40-year-old lender based in Santa Clara, Calif., last Friday. The nation’s 16th-largest bank, Silicon Valley Bank was one of the most prominent lenders in the world of technology start-ups. Its failure is the second-largest in U.S. history, and the largest since the financial crisis of 2008. The F.D.I.C has had trouble finding a buyer for the bank.
The bankruptcy filing sets up a battle between SVB Financial’s creditors and the F.D.I.C. Each side is likely to clamor for the proceeds that SVB Financial generates through the sale of its various businesses.
The F.D.I.C. is trying to sell SVB’s assets amid recently opened investigations by federal prosecutors and U.S. securities regulators into the collapse of the bank. The inquiries are in their early stages, but the authorities are expected to focus on whether the bank’s executives fully disclosed to investors the extent to which it had been piling up unrealized losses tied to its bond holdings on its balance sheet.
Several insider stock sales by executives in the weeks before the collapse also are expected to draw scrutiny, legal experts have said. In late February, Gregory Becker, the recently ousted chief executive of Silicon Valley Bank, exercised options that permitted him to sell shares worth about $3 million. Mr. Becker sold those shares under a stock trading plan.
In a statement on Friday, Jim Kramer, a lawyer for Mr. Becker, said his client “conducted himself appropriately at all times, and that will be established once the full story is told.”
