SVB Financial Group starts Chapter 11 to preserve value

SVB Financial Group (the “Company”) (NASDAQ: SIVB) announced today that it has filed a voluntary petition for a judicially supervised Chapter 11 reorganization in the United States Bankruptcy Court for the Southern District of New York to preserve its value.

SVB Securities and SVB Capital’s funds and general partner entities are not included in the Chapter 11 filing and continue to operate in the ordinary course as SVB Financial Group continues its previously announced exploration of strategic options for these valuable businesses.

• SVB Capital, a platform for venture capital and private credit funds with deep roots in the innovation economy, continues to operate as usual and serve its clients. The SVB Capital funds and general partners are separate legal entities, distinct from SVB Financial Group, and are not included in the Chapter 11 filing. SVB Capital funds continue to have access to funding sources, including underwriting credit facilities and investor and general partner commitments. SVB Financial Group is committed to providing SVB Capital with support throughout the reorganization process.

• SVB Securities, a regulated broker-dealer with its own management, employees and capital, is a separate legal entity from SVB Financial Group and is not included in the Chapter 11 filing. It continues to function as normal. SVB Financial Group, which owns the shares in SVB Securities, is committed to providing SVB Securities with support throughout the reorganization process.

SVB Financial Group is no longer affiliated with Silicon Valley Bank, NA, or the bank’s private banking and wealth management business, SVB Private. The bank’s successor, Silicon Valley Bridge Bank, NA, operates under the jurisdiction of the Federal Deposit Insurance Corporation (“FDIC”) and is not included in the Chapter 11 filing.
The company believes it has about $2.2 billion in cash. In addition to cash and its holdings in SVB Capital and SVB Securities, SVB Financial Group has other valuable investment accounts and other assets for which it is also exploring strategic options.

SVB Financial Group’s funded debt is approximately $3.3 billion in aggregate principal amount of unsecured notes, which are recourse only to SVB Financial Group and have no claim against SVB Capital or SVB Securities. SVB Financial Group also has $3.7 billion in preferred equity outstanding.

SVB Financial Group intends to use the court-supervised process to assess strategic alternatives for SVB Capital, SVB Securities and the company’s other assets and investments. As previously announced, this process is led by a restructuring committee of five members appointed by the board of SVB Finanskonsern. Centerview Partners LLC is assisting the restructuring committee with the strategic options process, which is already underway and has attracted significant interest. Any sale process will be conducted through the Chapter 11 proceeding and be subject to court approval.

“The Chapter 11 process will allow SVB Financial Group to preserve value as it evaluates strategic options for its valuable businesses and assets, particularly SVB Capital and SVB Securities,” said William Kosturos, Chief Restructuring Officer for SVB Financial Group. “SVB Capital and SVB Securities continue to operate and serve clients, led by their long-standing and independent management teams.”

“SVB Financial Group will continue to work with Silicon Valley Bridge Bank,” Kosturos said. “We are committed to finding practical solutions to maximize the recoverable value for stakeholders in both entities.”

SVB Finanskonsern plans to submit the usual first-day petitions to the Insolvency Court, which, among other things, apply for permission to continue the operation of SVB Finanskonsern in the ordinary way as soon as a hearing can be arranged. Further documents related to the bankruptcy court’s processing will be submitted in the coming days.

Centerview Partners LLC is the proposed financial advisor, Sullivan & Cromwell LLP is the proposed legal advisor and Alvarez & Marsal is the proposed restructuring advisor for SVB Financial Group as debtor in possession.