The parent company of the bankrupt American bank Silicon Valley Bank has filed for bankruptcy protection under Chapter 11 of the US Bankruptcy Code, AP reported.
A case filed under Chapter 11 of the United States Bankruptcy Code is often referred to as a “reorganization” bankruptcy. Usually, the debtor remains “in possession,” has the powers and duties of a trustee, can continue to operate his business, and can, with court approval, borrow new money.
SVB Financial Group, along with its CEO and CFO, were attacked this week in a class action lawsuit. It alleges that the company failed to disclose information about the risks that future interest rate hikes would pose to its business.
SVB Financial Group is no longer affiliated with Silicon Valley Bank after the Federal Deposit Insurance Corporation took control of its management. Its collapse was the second largest bank failure in US history since 2008.
The bank’s successor, Silicon Valley Bridge Bank, is governed under the jurisdiction of the FCA and is not included in the Chapter 11 filing.
SVB Financial Group claims to have approximately $2.2 billion in liquidity.
“The Chapter 11 process will allow SVB Financial Group to preserve its value while evaluating strategic alternatives for its valuable businesses and assets, particularly SVB Capital and SVB Securities,” said William Kostouros, SVB Financial Group’s chief restructuring officer, in a statement in Friday.
