International Tax Panorama

SVB Financial Grouphas filed for a court-supervised reorganization under Chapter 11 bankruptcy protection to seek buyers for its assets, days after its former unit Silicon Valley Bank was taken over by U.S. regulators.

The move to commence bankruptcy proceedings comes as emergency measures to shore up confidence have so far failed to dispel worries about a financial contagion.

This comes days after the bank on March 13 said it was planning to explore strategic alternatives for its businesses, including the holding company, SVB Capital and SVB Securities.

However, SVB Securities and SVB Capital’s funds and general partner entities are not included in the Chapter 11 filing, the company said in a statement.

The parent company was exploring seeking bankruptcy protection for selling assets.

The company said on Friday it has about $2.2 billion of liquidity. It had $209 billion in assets at the end of last year.

What is Chapter 11 Bankruptcy?

Chapter 11 of the Bankruptcy Code generally provides for reorganization, usually involving a corporation or partnership. A chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time. People in business or individuals can also seek relief in chapter 11.

Background of SVB issue:

Californian regulators closed Silicon Valley Bank last Friday, making it the largest collapse since the financial crisis of 2008.

The tech lender was forced to sell a portfolio of treasuries and mortgage-backed securities to Goldman Sachs at a $1.8 billion loss after a rise in yields eroded value.

To plug that hole, it attempted to raise $2.25 billion in common equity and preferred convertible stock but spooked clients pulled deposits from the bank that led to $42 billion of outflows in a day.