SVB Financial Group: SVB Financial considers bankruptcy as an option to sell assets
SVB said on Monday it was considering strategic alternatives for its holdings, but did not list bankruptcy as an option. SVB has not yet made final decisions about its path and is still trying to find buyers for the assets without filing for bankruptcy, people said.
Filing for bankruptcy is the only option considered by the SVB. The financial firm is also exploring other restructuring and recapitalization alternatives based on its investment bank and venture capital business, one of the sources said. In addition to looking for direct buyers of assets, companies in such situations sometimes try to find investors to put new money into the enterprise.
SVB did not immediately respond to a request for comment.
U.S. regulators over the weekend took emergency action in response to the failure of a Silicon Valley bank, including guaranteeing uninsured deposits at the bank.
Bidders often hesitate when distressed businesses try to sell assets. One reason is that a deal made outside of bankruptcy proceedings can be rescinded if the company later seeks Chapter 11 protection within a certain period of time, called a return.
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In addition, applicants can purchase assets without certain obligations at bankruptcy auctions, so potential buyers of distressed assets sometimes prefer to wait for a judicial restructuring to begin before bidding. The SVB investment bank and venture capital business are separate divisions from Silicon Valley Bank, which California regulators closed last week after a flight of savers. The closed bank is undergoing reorganization under the jurisdiction of the Federal Deposit Insurance Corporation (FDIC) and Federal Reserve. Reuters reported on Wednesday that the FDIC has hired The Piper Sandler Companies as an advisor on the sale of Silicon Valley Bank.
A court-supervised bankruptcy auction usually begins with a so-called pursuer who has already agreed to the purchase, setting a starting price that other bidders can then try to exceed.
(Reporting by Mike Spector and Greg Rumeliotis in New York; Editing by Lisa Shoemaker)