SVB Financial Group, the bankrupt former parent of Silicon Valley Bank, is close to rebuilding a venture capital business it lost when federal regulators took over during a meltdown and transferred the bank to First-Citizens Bank & Trust, a lawyer said in court Tuesday.
(Bloomberg) — SVB Financial Group, the bankrupt former parent of Silicon Valley Bank, is close to rebuilding a venture capital business it lost when federal regulators took over during a meltdown and transferred the bank to First-Citizens Bank & Trust, a lawyer said in court Tuesday.
The business, SVB Capital, is worth about $427 million and is a key part of SVB Financial’s remaining portfolio, according to court papers. The bankrupt holding company still owns the assets of the venture capital business, but the nine key employees that managed those investments now work for First Citizens, according to court documents.
SVB Financial is trying to reorganize the assets that it retained after its bank was put into receivership earlier this year.
“One of the benefits of moving the business over is we will no longer have to be paying First Citizens Bank fees and expenses for maintaining the system,” SVB Financial attorney James Bromley told the judge overseeing the company’s Chapter 11 case.
SVB Financial was in federal court in Manhattan on Tuesday seeking approval to pay as much as $12.5 million to those nine employees as part of an incentive program. Those workers will return to SVB once the venture capital business is ready, the company has said.
After the company agreed to make some changes to the proposal, US Bankruptcy Judge Martin Glenn agreed to approve the bonus program.
The program is designed to reward the employees if they reduce SVB Financial’s exposure to capital calls related to the nearly $10 billion in assets they manage. If the employees can save SVB Capital enough money, they will share the full amount of the bonus pool, according to court records.
The bankruptcy case is SVB Financial Group, 23-10367, US Bankruptcy Court for the Southern District of New York.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.