Ahead of a possible bankruptcy filing, creditors of Silicon Valley Bank's parent company, SVB Financial Group, created a group through which they hope to profit from a sale of the collapsed firm's private-wealth and other assets, The Wall Street Journal reported March 14.
Five things to know:
1. The investor group, which includes Centerbridge Partners, Davidson Kempner Capital Management and Pacific Investment Management Co., bought SVB Financial's bonds coming into the weekend and now holds a significant slice of SVB Financial's $3.4 billion face value of bonds, according to the report.
2. The investor group wants SVB Financial to file for bankruptcy and auction off its nonbank assets, according to The Journal. SVB Financial appointed a restructuring committee to discuss other paths. It has not confirmed if it will file for bankruptcy.
3. If SVB Financial's assets attract a high enough valuation in an auction, the investor group could profit, The Journal reported. Proceeds from assets sold through bankruptcy often go to a company's creditors.
4. Federal regulators have taken over SVB and plan to sell the business at an auction this week, according to the report. It tried unsuccessfully to sell the business last weekend. SVB Financial's stock may be worthless, but its parent company owns other high-value assets, including SVB Capital, an investment manager overseeing $9.5 billion of funds, investment bank SVB Securities and wealth-management company SVB Private, according to the report.
5. Silicon Valley Bank shut down March 10 after failing to raise capital to keep running. The federal government stepped in to protect depositors and hope to restore faith in the nation's banking system.