SVB Financial Group chapter 11 plan becomes effective

Davis Polk advised the ad hoc group of noteholders in connection with the chapter 11 restructuring of SVB Financial Group (SVBFG), including approximately $3.37 billion in aggregate funded indebtedness. SVBFG filed its voluntary chapter 11 petition in the United States Bankruptcy Court for the Southern District of New York on March 17, 2023.

Prior to March 10, 2023, SVBFG was a financial services company focused on the innovation economy, and it owned and operated Silicon Valley Bank. On March 10, 2023, California banking authorities closed Silicon Valley Bank and appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. After March 10, 2023, SVBFG’s primary business lines consisted of SVB Capital, its venture capital and credit investment arm, and SVB Securities, an investment bank. These business lines were sold during the chapter 11 proceedings in transactions supported by the ad hoc group. In addition, while the chapter 11 proceedings were pending, SVBFG commenced litigation against the FDIC, in its corporate capacity and its capacity as receiver for Silicon Valley Bank and Silicon Valley Bridge Bank, to recover approximately $1.9 billion that had been deposited by SVBFG with its subsidiary Silicon Valley Bank prior to commencement of the receivership.

In January 2024, members of the ad hoc group entered into a restructuring support agreement with SVBFG and its unsecured creditors’ committee, and in August 2024, after being modified to reflect the terms of a settlement with an ad hoc group of cross-holders, the chapter 11 plan contemplated by the restructuring support agreement was confirmed with the support of over 98% of voting notes and general unsecured claims. The plan provides for, among other things, (1) the creation of a liquidating trust, for the sole purpose of liquidating and distributing assets, that will continue to pursue claims against the FDIC and other pending legal matters, as well as manage and collect on a large investment portfolio principally related to venture-stage companies, and (2) the creation of MNSN Holdings Inc., which will retain certain other assets of SVBFG. The effective date of the plan occurred on November 7, 2024, upon which members of the ad hoc group received class A-1 trust units and shares of MNSN Holdings Inc.

The Davis Polk restructuring team included partners Marshall S. Huebner and Angela M. Libby, counsel Aryeh Ethan Falk and associates Abraham Bane and Ben Weissler. The litigation team included partner Elliot Moskowitz and associate Kathryn S. Benedict. The tax team included partner Corey M. Goodman, counsel Tracy L. Matlock and associate Bradford Sherman. The financial institutions team included partner Luigi L. De Ghenghi, counsel Dana Seesel Bayersdorfer and associate Boaz B. Goldwater. The corporate team included counsel Jacob S. Kleinman. Partner Jennifer S. Conway and counsel Andrew H. Braid provided executive compensation advice. All members of the Davis Polk team are based in the New York office.