Silicon Valley Bank’s parent company announces that it will file for bankruptcy as the price of Bitcoin (BTC) skyrockets 30% in a week.
In a new press release, SVB Financial Group, the conglomerate that owns SVB, says it will file for Chapter 11 bankruptcy as a way to preserve value.
Although other parts of the corporation, such as SVB Capital and SVB Securities, are in good health, the group decided to file for bankruptcy because it does not have enough liquidity to cover SVB’s debt.
“SVB Financial Group announced today that it has filed a voluntary petition for a court-supervised reorganization under Chapter 11 in the United States Bankruptcy Court for the Southern District of New York to preserve value.
The SVB Securities and SVB Capital funds and general partner entities are not included in the Chapter 11 filing and continue to operate in the normal course as SVB Financial Group continues its previously announced exploration of strategic alternatives for these valuable businesses.” .
The firm says it filed for bankruptcy so it wouldn’t have to loot the assets of its other subsidiaries to pay off SVB’s debt.
As stated by William Kosturos, Head of Restructuring at SVB Financial Group, in the press release,
“The Chapter 11 process will allow SVB Financial Group to preserve value while evaluating strategic alternatives for its prized businesses and assets, especially SVB Capital and SVB Securities. SVB Capital and SVB Securities continue to operate and serve clients, led by their long-standing and independent leadership teams.”
SVB’s troubles began last week when the contagion spread to other banks. Turmoil in the banking sector blew up the king of cryptocurrencies as BTC surged from around $19,500 on March 10 to its current price of $26,387, an increase of 30%.
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