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SVB Financial Group: SVB Financial explores bankruptcy as an option to sell assets

SVB Financial Group, the company whose former subsidiary Silicon Valley Bank was acquired by US banking regulators last week, is exploring bankruptcy as an option for the sale of assets that include its investment banking and venture capital businesses, they said. people familiar with the matter.

SVB said on Monday it was considering strategic alternatives for its assets, but did not disclose bankruptcy as one of the potential options. SVB has not made any final decisions about which way it will go and is still trying to find buyers for assets without declaring bankruptcy, the people said.

A bankruptcy filing is just one option the SVB is considering. The finance company is also exploring other restructuring and recapitalization alternatives built around its investment banking and venture capital businesses, one of the people said. In addition to looking for direct buyers for assets, companies in such situations sometimes try to find investors to put new money into a company.

SVB did not immediately respond to a request for comment.

US regulators rolled out emergency measures over the weekend following the bankruptcy of Silicon Valley Bank, which included insuring uninsured deposits at the bank.

Bidders are often hesitant when struggling companies are trying to sell assets. One reason is that a deal made out of bankruptcy can be undone if a company later seeks Chapter 11 protection within a certain period of time, in what is known as a clawback.

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In addition, bidders can acquire assets free and clear of certain liabilities in bankruptcy auctions, so potential buyers of distressed assets sometimes prefer to wait for a judicial restructuring to begin before bidding. SVB’s investment banking and venture capital business are separate divisions of the Silicon Valley Bank business, which California regulators closed last week after a run on depositors. The closed bank is undergoing resolution under the jurisdiction of the Federal Deposit Insurance Corp (FDIC) and the Federal Reserve. Reuters reported on Wednesday that the FDIC hired Piper Sandler Companies as a consultant to sell Silicon Valley Bank.

A court-supervised bankruptcy auction usually begins with a called bidder who has already agreed to the purchase, setting a starting price that other bidders can try to beat.

(Reporting by Mike Spector and Greg Roumeliotis in New York; Editing by Lisa Shumaker)

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