{"id":5641,"date":"2023-03-15T21:15:23","date_gmt":"2023-03-15T21:15:23","guid":{"rendered":"https:\/\/www.sherin.com\/real-estate\/?p=5641"},"modified":"2023-03-16T15:10:03","modified_gmt":"2023-03-16T15:10:03","slug":"client-alert-silicon-valley-bank-takeover-what-you-need-to-know","status":"publish","type":"post","link":"https:\/\/www.sherin.com\/real-estate\/2023\/03\/15\/client-alert-silicon-valley-bank-takeover-what-you-need-to-know\/","title":{"rendered":"Client Alert: Silicon Valley Bank Takeover: What You Need to Know"},"content":{"rendered":"

SVB Takeover Background<\/h3>\n

On Friday, March 10, 2023, Silicon Valley Bank (SVB) was closed by the California Department of Financial Protection and Innovation (DFPI) after numerous depositors ran to withdraw funds from SVB. The Federal Deposit Insurance Company (FDIC) was then named as receiver of SVB.<\/p>\n

Following the weekend, on Monday, March 13, the FDIC issued a press release<\/a> stating that all deposits, insured and uninsured, and most assets, had been transferred to Silicon Valley Bridge, N.A., an FDIC-operated, full-service \u201cbridge bank.\u201d This transfer is aimed at providing a level of protection to all SVB clients, who subsequently became clients of Silicon Valley Bridge Bank, N.A., by, among other things, providing clients full access to their funds; SVB official checks, direct deposits, and autopay accounts all now continue to clear. In addition, the FDIC also transferred all \u201cqualified financial contracts\u201d of SVB to Silicon Valley Bridge Bank, N.A. These contracts include any securities contracts, commodity contracts, letters of credit (LOCs), and purchase agreements.<\/p>\n

FDIC stated in its March 13th press release that all depositors of SVB will be made whole, but shareholders and some unsecured debt holders would not be protected. Yesterday FDIC posted updated FAQs on its website<\/a> providing additional details for its depositors, borrowers and creditors.<\/p>\n

SVB Going Forward<\/h3>\n

As of March 13, 2023, Silicon Valley Bridge Bank, N.A. is being managed by Tim Mayopoulos, the former CEO of Fannie Mae. In addition, Silicon Valley Bridge Bank, N.A. has created a restructuring committee which includes former SVB board members. This committee is responsible for finding a buyer for SVB, SVB Capital, SVB Securities, and SVB\u2019s other assets and investments. Additionally, the committee will determine what to do with SVB Financial\u2019s $3 billion in funded debt. See SVB Financial Group\u2019s March 13, 2023, Form 8-K<\/a> for reference.<\/p>\n

Details for Counterparties: On March 14, 2023, Silicon Valley Bridge Bank, N.A. posted to its website<\/a> further explanations and information regarding the impact of the transition to Silicon Valley Bridge Bank, N.A., including confirmation that it has assumed the obligations and commitments of former SVB, including all of SVB\u2019s loan positions, commitments to advance under credit agreements, and other duties under credit agreements. For example, this means that any Landlords holding LOCs issued by former SVB may now exercise draw rights on these LOCs through Silicon Valley Bridge Bank, N.A. under the same conditions as previously with SVB. Draws on any LOCs, including those issued by SVB, require conformance to the technical considerations of the specific LOC as well as the terms and conditions of the applicable document secured by the LOC (e.g., lease). There may be other specific factors to consider before drawing on or obtaining or requesting a replacement LOC.<\/p>\n

Client Options Going Forward<\/h3>\n

SVB had 17 branches in California and Massachusetts. Thus, many businesses, institutions, non-profits, and individuals operating and\/or residing in Massachusetts are directly affected by SVB\u2019s closure. Below are just some initial options for those affected to consider.<\/p>\n