SVB reaches restructuring support agreement with committee, noteholders

By Sarah Lizee

Olympia, Wash., Jan. 9 – SVB Financial Group has reached a restructuring support agreement with a group of holders of 48.7% of outstanding principal amount of senior notes and the official committee of unsecured creditors, according to a term sheet filed Tuesday with the U.S. Bankruptcy Court for the Southern District of New York.

The RSA will take effect through a Chapter 11 plan, SVB said.

On the effective date of the plan, a liquidation trust will be created, and the debtors will contribute assets to be agreed between the RSA parties.

The assets may include claims and causes of action; investment securities, including the debtor’s direct investment and warrant portfolios and its synthetic equity instrument in Leerink Partners LLC; limited partner interests held by the debtors in investment funds that are part of the SVB Capital business; cash; and proceeds of a potential NewCo transaction.

Class A, B and C units will be issued out of the liquidation trust.

Unless a general unsecured claimholder opts to cash out, the holder will receive their pro rata share of class A units.

Holders of subordinated note claims will receive their pro rata share of the class B trust units.

Each holder of an allowed preferred equity interest will receive their pro rata share of the class C trust units.

The class A trust units will be issued with an initial distribution preference that will accrete at an annual rate of 12%. The initial distribution preference will be calculated at the face amount of the general unsecured claims receiving class A trust units, minus the value of NewCo common stock distributed to holders of allowed general unsecured claims.

The class B and C trust units will receive no distributions until the distribution preference of the class A units has been satisfied in full.

The class B units will be issued to holders of allowed subordinated note claims with an initial distribution preference to be calculated at the face amount of the allowed subordinated note claims, which class B trust units will accrete at an annual rate of 12%.

The class C trust units will receive no distributions until the distribution preference of the class B trust units has been satisfied in full. After that, class C trust units will be entitled to 100% of trust distributions.

The NewCo entity will do the following:

• Issue debt to the liquidating trust in a total principal amount to be agreed by the RSA parties reflecting 70% to 80% of the total enterprise value of NewCo, or a lesser amount agreed by the parties; and

• Issue 100% of its new common equity interests to holders of allowed general unsecured claims, subject to dilution by a NewCo rights offering, if any.

The debtor, the creditors committee and the required noteholders will continue to work together to evaluate opportunities to maximize the value of all or some of the assets or equity of NewCo, including through a rights offering, marketing process, private placement or otherwise, SVB said.

The financial services and bank holding company is based in Santa Clara, Calif. The company filed bankruptcy on March 17, 2023 under Chapter 11 case number 23-10367.

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