Silicon Valley Bank's parent company cut off from bank's records
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[March 20, 2023] By
Dietrich Knauth
(Reuters) - SVB Financial, the bankrupt parent company of Silicon Valley
Bank, has lost access to its financial records after the bank was placed
into receivership by the Federal Deposit Insurance Corporation (FDIC),
according to court documents filed in Manhattan on Sunday.
SVB Financial is exploring options, including a potential bankruptcy
sale, for its venture capital and investment banking businesses, which
were not included in the FDIC's takeover of SVB. But its Chapter 11
bankruptcy has gotten off to a "challenging" start due to a breakdown in
cooperation with the bridge bank set up to take over SVB's business,
according to a declaration filed Sunday by SVB Financial Chief
Restructuring Officer William Kosturos in U.S. bankruptcy court.
SVB Financial has no employees of its own, and the new bank's employees
"cut off access" to a substantial portion of SVB Financial's "books,
records, files, electronic systems and key employees," according to
Kosturos.
Kosturos said SVB Financial is working to re-establish access.
SVB Financial filed for bankruptcy protection on Friday, about a week
after California banking regulators closed Silicon Valley Bank in the
largest U.S. bank failure since the 2008 financial crisis.
The FDIC is attempting to sell SVB and may seek a breakup of the failed
lender.
The FDIC receivership removed SVB Financial's primary source of
liquidity and most of its business infrastructure, as well as triggering
defaults on SVB Financial's debt, forcing the company into bankruptcy,
according to court documents.
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SVB (Silicon Valley Bank) logo is seen
in this illustration taken March 19, 2023. REUTERS/Dado Ruvic/Illustration
SVB Financial's court filings listed $19 billion in assets, $2.2
billion in cash and cash equivalents, and $3.4 billion in
liabilities. About $15.5 billion of SVB Financial's asset value was
attributed to the SVB banking business that was seized by
regulators.
SVB Capital, the venture capital and credit investment arm of the
company, manages about $9.5 billion in other investors' money spread
across 30 pooled investment funds, according to Kosturos'
declaration.
Those investment funds include direct venture funds that invest in
companies, funds-of-funds that invest in other venture capital
funds, and debt funds that provide lending and other financing
solutions to startups.
SVB Securities is an investment bank that provides financial
services to healthcare and technology companies, according to
Kosturos' declaration.
In its court filings on Sunday, SVB Financial also made several
requests intended to continue smooth operation of its business
during its bankruptcy, such as asking for permission to maintain its
existing bank accounts and to continue paying for services provided
by SVB employees.
(Reporting by Dietrich Knauth; Editing by Alexia Garamfalvi and
Chris Reese)
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