One week after the collapse of the technology-focused Silicon Valley Bank, its parent filed for Chapter 11 bankruptcy protection. SVB Financial Group's filing on Friday didn't come as much of a surprise given that US banking authorities now control the majority of the firm.
This week also saw a class action lawsuit filed against Silicon Valley Bank and its chief executive officer and chief financial officer, alleging that the company concealed the adverse effects that rising interest rates would have on its operations, according to AP News.
Silicon Valley Bridge Bank, the bank's successor, has been excluded from the Chapter 11 filing since it is under FDIC supervision. SVB Financial Group estimates its liquidity to be at $2.2 billion, Fortune reported. Because the Federal Deposit Insurance Corporation took possession of it, it is no longer associated with Silicon Valley Bank.
If SVB Financial Group files for bankruptcy, creditors of the holding company and bank authorities trying to make depositors whole will struggle with judicial over the bank's remaining assets, per CBS News. SVB Financial Group said it is also considering selling other valuable assets, including accounts holding financial instruments.
Read Also : China's Xi Jinping To Visit Russia Next Week
Haunting Memories of The 2008 US Financial Crisis
The firm's private credit and venture capital funds are SVB Capital. In the securities industry, SVB Securities is a licensed intermediary. Both still function and have financial sources, according to the company.
Last Friday's closure of Silicon Valley Bank and New York's Signature Bank two days later brought back terrible memories of the financial crisis that caused the Great Recession 15 years ago. As indicated by the increase in online searches last week, people fear their banks might suffer the same fate as Silicon Valley Bank.
Former US Treasury Secretary Lawrence Summers reassured the public that, despite the dire news reports, Americans should not worry because the situation now differs from the 2008 financial crisis, per an earlier HNGN report.
Related Article : First Republic Bank Avoids SVB-Like Collapse
