SVB Financial explores bankruptcy as option for asset sales

SVB Financial Group, the corporate whose former subsidiary Silicon Valley Bank was taken over by U.S. banking regulators final week, is exploring searching for chapter safety as one choice for promoting property that embrace its funding financial institution and enterprise capital business, folks aware of the matter mentioned.

SVB mentioned on Monday it was contemplating strategic options for its property however didn’t disclose chapter as one of many potential choices. SVB has not made any remaining selections on the trail it can take and continues to be searching for consumers for property with out submitting for chapter, the folks mentioned.

A chapter submitting is just one choice SVB is contemplating. The monetary agency can be exploring different restructuring and recapitalization options constructed round its funding financial institution and enterprise capital business, one of many folks mentioned. In addition to searching for outright consumers for property, firms in such conditions generally try to search out traders to place new cash into an enterprise.

SVB didn’t instantly reply to a request for remark.

U.S. regulators launched emergency measures over the weekend within the wake of Silicon Valley Bank’s failure that included guaranteeing uninsured deposits on the financial institution.

Bidders are sometimes hesitant when distressed enterprises are trying to promote property. One motive is {that a} deal finished exterior of chapter may be unwound if an organization later seeks Chapter 11 safety inside a sure timeframe, in what is called a clawback.

In addition, suitors can purchase property free and away from sure liabilities in chapter auctions, so potential consumers of distressed property generally choose ready for a courtroom restructuring to begin earlier than bidding. SVB’s funding financial institution and enterprise capital business are separate divisions of the corporate from Silicon Valley Bank, which California regulators closed final week after a run by depositors. The shuttered financial institution is present process decision beneath the jurisdiction of the Federal Deposit Insurance Corp (FDIC) and the Federal Reserve. Reuters reported on Wednesday that the FDIC employed Piper Sandler Companies as adviser to promote Silicon Valley Bank.

A court-supervised chapter public sale often begins with a so-called stalking horse bidder that has already agreed to a purchase order, setting an preliminary worth different suitors can then try and high.

(Reporting by Mike Spector and Greg Roumeliotis in New York; Editing by Lisa Shumaker)

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