EX-99.1 2 d846898dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

23-10367-mg  Doc 1323  Filed 07/22/24  Entered 07/22/24 20:53:36  Main Document

Pg 1 of 12

 

UNITED STATES BANKRUPTCY COURT

Southern DISTRICT OF New York

 

In Re. SVB Financial Group    §    Case No. 23-10367
      §      
        §   
        Debtor(s)    §      
         ☐ Jointly Administered

 

Monthly Operating Report         Chapter 11

 

Reporting Period Ended: 06/30/2024       Petition Date: 03/17/2023           

 

Months Pending: 16       Industry Classification:    5     2     3     9 

 

Reporting Method:    Accrual Basis   LOGO    Cash Basis   LOGO   

 

Debtor’s Full-Time Employees (current):    0        
Debtor’s Full-Time Employees (as of date of order for relief):    0   

Supporting Documentation (check all that are attached):

(For jointly administered debtors, any required schedules must be provided on a non-consolidated basis for each debtor)

 

☐   Statement of cash receipts and disbursements

☒   Balance sheet containing the summary and detail of the assets, liabilities and equity (net worth) or deficit

☒   Statement of operations (profit or loss statement)

☐   Accounts receivable aging

☐   Postpetition liabilities aging

☐   Statement of capital assets

☐   Schedule of payments to professionals

☐   Schedule of payments to insiders

☐   All bank statements and bank reconciliations for the reporting period

☐   Description of the assets sold or transferred and the terms of the sale or transfer

 

/s/ James L. Bromley

   

James L. Bromley

Signature of Responsible Party     Printed Name of Responsible Party

07/22/2024

   
Date    

125 Broad Street, New York, New York 10004

    Address

STATEMENT: This Periodic Report is associated with an open bankruptcy case; therefore, Paperwork Reduction Act exemption 5 C.F.R. § 1320.4(a)(2) applies.

 

UST Form 11-MOR (12/01/2021)    1   


23-10367-mg Doc 1323 Filed 07/22/24 Entered 07/22/24 20:53:36 Main Document

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Debtor’s Name SVB Financial Group    Case No. 23-10367

 

Part 1: Cash Receipts and Disbursements

   Current Month      Cumulative  

a.   Cash balance beginning of month

   $ 215,608,967     
  

 

 

    

b.  Total receipts (net of transfers between accounts)

   $ 35,878,792      $ 885,842,058  
  

 

 

    

 

 

 

c.   Total disbursements (net of transfers between accounts)

   $ 17,931,757      $ 2,679,500,356  
  

 

 

    

 

 

 

d.  Cash balance end of month (a+b-c)

   $ 233,556,002     
  

 

 

    

 

 

 

e.   Disbursements made by third party for the benefit of the estate

   $ 0      $ 0  
  

 

 

    

 

 

 

f.   Total disbursements for quarterly fee calculation (c+e)

   $ 17,931,757      $ 2,679,500,356  
  

 

 

    

 

 

 

Part 2: Asset and Liability Status

(Not generally applicable to Individual Debtors. See Instructions.)

   Current Month         

a.   Accounts receivable (total net of allowance)

   $ 1,960,619,331     
  

 

 

    

b.  Accounts receivable over 90 days outstanding (net of allowance)

   $ 0     
  

 

 

    

c.   Inventory ( Book LOGO Market LOGO Other LOGO (attach explanation))

   $ 0     
  

 

 

    

d   Total current assets

   $ 2,570,793,239     
  

 

 

    

e.   Total assets

   $ 3,527,362,156     
  

 

 

    

f.   Postpetition payables (excluding taxes)

   $ 50,720,667     
  

 

 

    

g.  Postpetition payables past due (excluding taxes)

   $ 0     
  

 

 

    

h.  Postpetition taxes payable

   $ 0     
  

 

 

    

i.   Postpetition taxes past due

   $ 0     
  

 

 

    

j.   Total postpetition debt (f+h)

   $ 50,720,667     
  

 

 

    

k.  Prepetition secured debt

   $ 0     
  

 

 

    

l.   Prepetition priority debt

   $ 0     
  

 

 

    

m.   Prepetition unsecured debt

   $ 3,482,187,778     
  

 

 

    

n.  Total liabilities (debt) (j+k+l+m)

   $ 3,532,908,444     
  

 

 

    

o.  Ending equity/net worth (e-n)

   $ -5,546,289     
  

 

 

    

Part 3: Assets Sold or Transferred

   Current Month      Cumulative  

a.   Total cash sales price for assets sold/transferred outside the ordinary course of business

   $ 0      $ 63,768,001  
  

 

 

    

 

 

 

b.  Total payments to third parties incident to assets being sold/transferred outside the ordinary course of business

   $ 0      $ 5,054,655  
  

 

 

    

 

 

 

c.   Net cash proceeds from assets sold/transferred outside the ordinary course of business (a-b)

   $ 0      $ 58,713,346  
  

 

 

    

 

 

 

Part 4: Income Statement (Statement of Operations)

(Not generally applicable to Individual Debtors. See Instructions.)

   Current Month      Cumulative  

a.   Gross income/sales (net of returns and allowances)

   $ 1,944,184     
  

 

 

    

b.  Cost of goods sold (inclusive of depreciation, if applicable)

   $ 0     
  

 

 

    

c.   Gross profit (a-b)

   $ 1,944,184     
  

 

 

    

d.  Selling expenses

   $ 0     
  

 

 

    

e.   General and administrative expenses

   $ 1,923,757     
  

 

 

    

f.   Other expenses

   $ -2,202,193     
  

 

 

    

g.  Depreciation and/or amortization (not included in 4b)

   $ 313,635     
  

 

 

    

h.  Interest

   $ 0     
  

 

 

    

i.   Taxes (local, state, and federal)

   $ 0     
  

 

 

    

j.   Reorganization items

   $ 12,102,050     
  

 

 

    

k.  Profit (loss)

   $ -10,193,066      $ -610,905,651  
  

 

 

    

 

 

 

 

UST Form 11-MOR (12/01/2021)    2   


23-10367-mg Doc 1323 Filed 07/22/24 Entered 07/22/24 20:53:36 Main Document

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Debtor’s Name SVB Financial Group    Case No. 23-10367

 

Part 5: Professional Fees and Expenses  
                     Approved 
Current Month 
    

Approved  

Cumulative 

    

Paid Current 

Month 

    

Paid 

Cumulative 

 
a.   Debtor’s professional fees & expenses (bankruptcy) Aggregate Total    $ 9,672,260      $ 142,097,708      $ 9,259,236      $ 137,771,256  
    Itemized Breakdown by Firm              
        Firm Name   Role                                    
    i   Alvarez & Marsal   Financial Professional    $ 3,699,823      $ 62,520,059      $ 3,699,823      $ 62,520,059  
    ii   Centerview Partners LLC   Financial Professional    $ 240,000      $ 9,123,647      $ 0      $ 8,643,683  
    iii   Huron   Financial Professional    $ 623,968      $ 3,692,700      $ 1,019,769      $ 3,692,700  
    iv   Jenner & Block LLP   Other    $ 859,864      $ 14,069,317      $ 859,864      $ 14,069,317  
    v   Kroll   Other    $ 402,118      $ 2,418,342      $ 402,118      $ 2,418,342  
    vi   Sullivan & Cromwell LLP    Lead Counsel    $ 3,846,487      $ 50,273,642      $ 3,277,661      $ 46,427,155  
    vii                                            
    viii                                            
    ix                                            
    x                                            
    xi                                            
    xii                                            
    xiii                                            
    xiv                                            
    xv                                            
    xvi                                            
    xvii                                            
    xviii                                            
    xix                                            
    xx                                            
    xxi                                            
    xxii                                            
    xxiii                                            
    xxiv                                            
    xxv                                            
    xxvi                                            
    xxvii                                            
    xxviii                                            
    xxix                                            
    xxx                                            
    xxxi                                            
    xxxii                                            
    xxxiii                                            
    xxxiv                                            
    xxxv                                            
    xxxvi                                            

 

UST Form 11-MOR (12/01/2021)    3   


23-10367-mg Doc 1323 Filed 07/22/24 Entered 07/22/24 20:53:36 Main Document

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Debtor’s Name SVB Financial Group    Case No. 23-10367

 

    xxxvii                            
    xxxviii                            
    xxxix                            
    xl                            
    xli                            
    xlii                            
    xliii                            
    xliv                            
    xlv                            
    xlvi                            
    xlvii                            
    xlviii                            
    xlix                            
    l                            
    li                            
    lii                            
    liii                            
    liv                            
    lv                            
    lvi                            
    lvii                            
    lviii                            
    lix                            
    lx                            
    lxi                            
    lxii                            
    lxiii                            
    lxiv                            
    lxv                            
    lxvi                            
    lxvii                            
    lxviii                            
    lxix                            
    lxx                            
    lxxi                            
    lxxii                            
    lxxiii                            
    lxxiv                            
    lxxv                            
    lxxvi                            
    lxxvii                            
    lxxviii                            

 

UST Form 11-MOR (12/01/2021)    4   


23-10367-mg Doc 1323 Filed 07/22/24 Entered 07/22/24 20:53:36 Main Document

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Debtor’s Name SVB Financial Group    Case No. 23-10367

 

    lxxix                                            
    lxxx                                            
    lxxxi                                            
    lxxxii                                            
    lxxxiii                                            
    lxxxiv                                            
    lxxxv                                            
    lxxxvi                                            
    lxxxvii                                            
    lxxxviii                                            
    lxxxix                                            
    xc                                            
    xci                                            
    xcii                                            
    xciii                                            
    xciv                                            
    xcv                                            
    xcvi                                            
    xcvii                                            
    xcviii                                            
    xcix                                            
    c                                            
    ci                                            
                                               
                     Approved
Current Month 
     Approved 
Cumulative 
     Paid Current 
Month 
     Paid 
Cumulative 
 
b.   Debtor’s professional fees & expenses (nonbankruptcy) Aggregate Total    $ 121,565      $ 2,598,862      $ 65,235      $ 2,438,190  
    Itemized Breakdown by Firm              
        Firm Name   Role                                    
    i   Aldrich & Bonnefin, PLC   Other    $ 0      $ 20,736      $ 0      $ 20,736  
    ii   Chapman and Cutler, LLP   Other    $ 3,576      $ 90,030      $ 0      $ 86,454  
    iii   Cohen Ziffer Frenchman & McKOther        $ 63,509      $ 231,238      $ 63,509      $ 231,238  
    iv   Debevoise & Plimpton LLP   Other    $ 0      $ 135,193      $ 0      $ 79,863  
    v   DLA Piper Ireland LLP   Local Counsel    $ 0      $ 16,765      $ 0      $ 16,765  
    vi   DLA Piper LLP (US)   Other    $ 0      $ 20,662      $ 0      $ 20,662  
    vii   Farella Braun + Martel LLP   Other    $ 0      $ 543,393      $ 0      $ 503,035  
    viii   Goodwin Procter LLP   Other    $ 0      $ 97,727      $ 0      $ 97,727  
    ix   Herzog Fox & Neeman   Local Counsel    $ 6,733      $ 126,962      $ 0      $ 120,229  
    x   HWG LLP   Local Counsel    $ 0      $ 30,585      $ 0      $ 30,585  
    xi   Kilpatrick Townsend & Stockto   Other    $ 6,063      $ 82,013      $ 1,726      $ 75,951  
    xii   Miller & Olson LLP   Other    $ 0      $ 3,673      $ 0      $ 3,673  
    xiii   Nishith Desai Associates   Local Counsel    $ 0      $ 140,975      $ 0      $ 134,048  
    xiv   Norton Rose LLP Shanghai   Local Counsel    $ 26,619      $ 439,261      $ 0      $ 412,642  

 

UST Form 11-MOR (12/01/2021)    5   


23-10367-mg Doc 1323 Filed 07/22/24 Entered 07/22/24 20:53:36 Main Document

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Debtor’s Name SVB Financial Group    Case No. 23-10367

 

    xv   Proskauer Rose LLP   Other    $     0     $ 269,274      $    0     $ 269,274  
    xvi   Trucker Huss, APC   Other    $   15,066     $ 350,375      $    0     $ 335,309  
    xvii                                    
    xviii                                    
    xix                                    
    xx                                    
    xxi                                    
    xxii                                    
    xxiii                                    
    xxiv                                    
    xxv                                    
    xxvi                                    
    xxvii                                    
    xxviii                                    
    xxix                                    
    xxx                                    
    xxxi                                    
    xxxii                                    
    xxxiii                                    
    xxxiv                                    
    xxxv                                    
    xxxvi                                    
    xxxvii                                    
    xxxvii                                    
    xxxix                                    
    xl                                    
    xli                                    
    xlii                                    
    xliii                                    
    xliv                                    
    xlv                                    
    xlvi                                    
    xlvii                                    
    xlviii                                    
    xlix                                    
    l                                    
    li                                    
    lii                                    
    liii                                    
    liv                                    
    lv                                    
    lvi                                    

 

UST Form 11-MOR (12/01/2021)    6   


23-10367-mg Doc 1323 Filed 07/22/24 Entered 07/22/24 20:53:36 Main Document

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Debtor’s Name SVB Financial Group    Case No. 23-10367

 

    lvii                            
    lviii                            
    lix                            
    lx                            
    lxi                            
    lxii                            
    lxiii                            
    lxiv                            
    lxv                            
    lxvi                            
    lxvii                            
    lxviii                            
    lxix                            
    lxx                            
    lxxi                            
    lxxii                            
    lxxiii                            
    lxxiv                            
    lxxv                            
    lxxvi                            
    lxxvii                            
    lxxviii                            
    lxxix                            
    lxxx                            
    lxxxi                            
    lxxxii                            
    lxxxiii                            
    lxxxiv                            
    lxxxv                            
    lxxxvi                            
    lxxxvii                            
    lxxxviii                            
    lxxxix                            
    xc                            
    xci                            
    xcii                            
    xciii                            
    xciv                            
    xcv                            
    xcvi                            
    xcvii                            
    xcviii                            
    xcix                            
    c                            
c.   All professional fees and expenses (debtor & committees)    $12,401,555    $192,992,939    $13,649,724    $188,505,815

 

UST Form 11-MOR (12/01/2021)    7   


23-10367-mg Doc 1323 Filed 07/22/24 Entered 07/22/24 20:53:36 Main Document

Pg 8 of 12

 

Debtor’s Name SVB Financial Group    Case No. 23-10367

 

Part 6: Postpetition Taxes

     Current Month          Cumulative     

a.   Postpetition income taxes accrued (local, state, and federal)

   $ 0      $ 0  
  

 

 

    

 

 

 

b.  Postpetition income taxes paid (local, state, and federal)

   $ 0      $ 0  
  

 

 

    

 

 

 

c.   Postpetition employer payroll taxes accrued

   $ 0      $ 0  
  

 

 

    

 

 

 

d.  Postpetition employer payroll taxes paid

   $ 0      $ 0  
  

 

 

    

 

 

 

e.   Postpetition property taxes paid

   $ 0      $ 0  
  

 

 

    

 

 

 

f.   Postpetition other taxes accrued (local, state, and federal)

   $ 16,400      $ 327,734  
  

 

 

    

 

 

 

g.  Postpetition other taxes paid (local, state, and federal)

   $ 0      $ 355,604  
  

 

 

    

 

 

 

 

Part 7: Questionnaire - During this reporting period:

    

a.   Were any payments made on prepetition debt? (if yes, see Instructions)

     Yes  LOGO    No LOGO

b.  Were any payments made outside the ordinary course of business without court approval? (if yes, see Instructions)

     Yes  LOGO    No LOGO

c.   Were any payments made to or on behalf of insiders?

     Yes LOGO    No LOGO

d.  Are you current on postpetition tax return filings?

     Yes LOGO    No LOGO

e.   Are you current on postpetition estimated tax payments?

     Yes LOGO    No LOGO

f.   Were all trust fund taxes remitted on a current basis?

     Yes LOGO    No LOGO

g.  Was there any postpetition borrowing, other than trade credit? (if yes, see Instructions)

     Yes  LOGO    No LOGO

h.  Were all payments made to or on behalf of professionals approved by the court?

     Yes  LOGO    No LOGO  N/A LOGO

i.   Do you have:

   Worker’s compensation insurance?      Yes LOGO    No LOGO
  

If yes, are your premiums current?

     Yes LOGO    No  LOGO  N/A   LOGO (if no, see Instructions)
   Casualty/property insurance?      Yes LOGO    No LOGO
  

If yes, are your premiums current?

     Yes LOGO    No  LOGO  N/A   LOGO (if no, see Instructions)
   General liability insurance?      Yes LOGO    No LOGO
  

If yes, are your premiums current?

     Yes LOGO    No LOGO  N/A   LOGO (if no, see Instructions)

j.   Has a plan of reorganization been filed with the court?

     Yes LOGO    No LOGO

k.  Has a disclosure statement been filed with the court?

     Yes LOGO    No LOGO

l.   Are you current with quarterly U.S. Trustee fees as set forth under 28 U.S.C. § 1930?

     Yes LOGO    No LOGO

 

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Debtor’s Name SVB Financial Group    Case No. 23-10367

 

Part 8: Individual Chapter 11 Debtors (Only)

                                 

a.   Gross income (receipts) from salary and wages

   $ 0     
  

 

 

    

b.  Gross income (receipts) from self-employment

   $ 0     
  

 

 

    

c.   Gross income from all other sources

   $ 0     
  

 

 

    

d.  Total income in the reporting period (a+b+c)

   $ 0     
  

 

 

    

e.   Payroll deductions

   $ 0     
  

 

 

    

f.   Self-employment related expenses

   $ 0     
  

 

 

    

g.  Living expenses

   $ 0     
  

 

 

    

h.  All other expenses

   $ 0     
  

 

 

    

i.   Total expenses in the reporting period (e+f+g+h)

   $ 0     
  

 

 

    

j.   Difference between total income and total expenses (d-i)

   $ 0     
  

 

 

    

k.  List the total amount of all postpetition debts that are past due

   $ 0     
  

 

 

    

l.   Are you required to pay any Domestic Support Obligations as defined by 11 U.S.C § 101(14A)?

     Yes  LOGO  No  LOGO     

m.   If yes, have you made all Domestic Support Obligation payments?

     Yes  LOGO  No  LOGO  N/A  LOGO     

Privacy Act Statement

28 U.S.C. § 589b authorizes the collection of this information, and provision of this information is mandatory under 11 U.S.C. §§ 704, 1106, and 1107. The United States Trustee will use this information to calculate statutory fee assessments under 28 U.S.C. § 1930(a)(6). The United States Trustee will also use this information to evaluate a chapter 11 debtor’s progress through the bankruptcy system, including the likelihood of a plan of reorganization being confirmed and whether the case is being prosecuted in good faith. This information may be disclosed to a bankruptcy trustee or examiner when the information is needed to perform the trustee’s or examiner’s duties or to the appropriate federal, state, local, regulatory, tribal, or foreign law enforcement agency when the information indicates a violation or potential violation of law. Other disclosures may be made for routine purposes. For a discussion of the types of routine disclosures that may be made, you may consult the Executive Office for United States Trustee’s systems of records notice, UST-001, “Bankruptcy Case Files and Associated Records.” See 71 Fed. Reg. 59,818 et seq. (Oct. 11, 2006). A copy of the notice may be obtained at the following link: http:// www.justice.gov/ust/eo/rules_regulations/index.htm. Failure to provide this information could result in the dismissal or conversion of your bankruptcy case or other action by the United States Trustee. 11 U.S.C. § 1112(b)(4)(F).

I declare under penalty of perjury that the foregoing Monthly Operating Report and its supporting documentation are true and correct and that I have been authorized to sign this report on behalf of the estate.

 

/s/ Nicholas R. Grossi

     

Nicholas R. Grossi

Signature of Responsible Party       Printed Name of Responsible Party

Interim Chief Financial Officer, and/or Authorized Signatory

     

07/22/2024

Title       Date

 

UST Form 11-MOR (12/01/2021)    9   


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Debtor’s Name SVB Financial Group    Case No. 23-10367

 

LOGO

 

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Debtor’s Name SVB Financial Group    Case No. 23-10367

 

LOGO

 

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Debtor’s Name SVB Financial Group    Case No. 23-10367

 

LOGO

 

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Notes and Supporting Documentation  Pg 1 of 6

 

UNITED STATES BANKRUPTCY COURT

SOUTHERN DISTRICT OF NEW YORK

 

In re SVB Financial Group    Case No. 23-10367 (MG)
   Reporting Period: 6/1/2024 – 6/30/2024

Supplemental Notes to Monthly Operating Report

FACTUAL BACKGROUND

Debtor-in-Possession Financial Statements: On March 17, 2023 (the “Petition Date”), SVB Financial Group (the “Debtor”) filed a voluntary petition in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) for relief under the provisions of Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”). The Debtor’s case is administered under the caption In re SVB Financial Group, Case No 23-10367 (the “Chapter 11 Case”). The Debtor is continuing to operate its remaining businesses as a debtor-in- possession under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court.

The Debtor is filing its monthly operating report (the “MOR”) for purposes of complying with the monthly operating requirements applicable in the Debtor’s Chapter 11 Case. The financial information contained in the MOR is unaudited and limited in scope to only those items and disclosures required pursuant to the Bankruptcy Code. The MOR has been completed using generally accepted accounting standards (e.g., the Financial Accounting Standards Board Accounting Standards Codification 852, Reorganizations (ASC 852)). The MOR, however, is not a complete set of financial statements pursuant to generally accepted accounting principles (“GAAP”) as it does not include all disclosures and financial statements (e.g., statement of cash flow or statement of shareholders’ equity) which are required pursuant to GAAP. Additionally, the MOR includes certain cash-basis schedules (e.g., Part 1: Cash Receipts and Disbursements) which are not in accordance with GAAP.

The financial information disclosed in the MOR was not prepared in accordance with federal or state securities laws or other applicable non-bankruptcy law or in lieu of complying with any periodic reporting requirements thereunder. Persons and entities trading in or otherwise purchasing, selling, or transferring the claims against or equity interests in the Debtor should evaluate this financial information in light of the purposes for which it was prepared. The Debtor is not liable for and undertakes no responsibility to indicate variations from securities laws reporting.

Basis of Presentation: As discussed in greater detail in the Declaration of William C. Kosturos in Support of the Debtor’s Chapter 11 Petition and First Day Pleadings [D.I. 21] and Supplemental Declaration of William C. Kosturos in Support of the Debtor’s Chapter 11 Petition and First Day Pleadings [D.I. 43], on March 10, 2023, the California banking authorities closed Silicon Valley Bank (the “Bank”) and appointed the Federal Deposit Insurance Corporation (“FDIC”) as receiver of the Bank (the “Receivership”).1 The FDIC subsequently transferred all deposits and substantially all assets of Silicon Valley Bank to a newly created, FDIC-operated bridge bank, Silicon Valley Bridge Bank, National Association (“Bridge Bank”). Before the Receivership, the Debtor’s information management systems were primarily maintained by the Bank pursuant to a shared services agreement. As a result of the Receivership, the Debtor no longer operates the Bank and no longer has complete access to these systems. The Debtor is continuing to work with the FDIC, as well as First Citizens Bank & Trust Company (“FCB”), as successor-in-interest to Bridge Bank, to gain access to its books and records.

 

1 

The Federal Deposit Insurance Corporation in its corporate capacity, as receiver of Bridge Bank and as receiver of the Bank are collectively referred to as the “FDIC.”

 

     


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In addition, before the Receivership, the Debtor’s executive officers, its principal accounting officer and all members of its accounting and finance teams were employed by the Bank. All of these individuals either resigned, became employees of Bridge Bank in connection with the Receivership or became an employee of FCB. The Debtor has made reasonable efforts to supplement the information available to it with additional information concerning transactions that may not have been identified in the books and records to which it has access.

Records of prepetition assets and liabilities, including, among other things, liabilities owed by the Debtor to its affiliates and FCB, are likely to be adjusted throughout the pendency of the Chapter 11 Case as claims are filed and items are approved by the Bankruptcy Court. The MOR and the Supplemental Balance Sheet and Supplemental Statement of Operations attached thereto, are an unconsolidated, stand-alone presentation of the Debtor’s assets and liabilities and income/loss. The financial results of Debtor’s subsidiaries not party to the Chapter 11 Case are included in the financial statements as Investments in Subsidiaries and Net (Gain)/Loss from Subsidiaries.

Reporting Period: Unless otherwise noted herein or in the MOR, the MOR generally reflects the Debtor’s books and records and financial activity occurring during the applicable reporting period. Except as otherwise noted, no adjustments have been made for activity occurring after the close of the reporting period.

NOTES TO MOR

Note 1: Employees

The Debtor did not directly employ any employees during the reporting period. SVB Employee Holdco LLC, a non-debtor direct subsidiary of the Debtor, employed six employees who performed services for the Debtor during the reporting period.

Note 2: Reorganization Accounting

Accounting standard ASC 852 requires expenses and income directly associated with the Chapter 11 Case to be reported separately in the statement of operations as Reorganization Items, net. Reorganization Items, net may include write-off of certain fees relating to debt obligations classified as Liabilities Subject to Compromise, expenses related to legal advisory and representation services, other professional consulting and advisory services, and changes in Liabilities Subject to Compromise. Reorganization Items, net will be recorded as such items are incurred and/or approved by the Bankruptcy Court.

Note 3: Investment Securities

Investment Securities primarily represent investments in venture capital and private equity funds, debt funds, private and public portfolio companies, including public equity securities held as a result of equity warrant assets exercised. The fair values of these investments are reflected in the financial statements and are adjusted on a quarterly basis. Fair value changes are recorded as unrealized gains or losses through net income.

Unconsolidated venture capital and private equity fund investments: Funds where ownership interest is typically less than 5% of the voting interests of each such fund and in which there is not the ability to exercise significant influence over the partnerships’ operating activities and financial policies. The unconsolidated venture capital and private equity fund investments are carried at fair value based on the fund investments’ net asset values per share as obtained from the general partners of the funds, adjusted for any contributions paid, distributions received from the investment, and significant fund transactions or market events during the reporting period.

Direct equity investments in private companies: The carrying value is based on the price at which the investment was acquired plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments. A range of factors is considered when adjusting the fair value of these investments, including, but not limited to, the term and nature of the investment, local market conditions, values for comparable securities, current and projected operating performance, exit strategies, financing transactions subsequent to the acquisition of the investment and a discount for certain investments that have lock-up restrictions or other features that indicate a discount to fair value is warranted.

 

   2   


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Note 4: Due to/from FDIC

The Debtor has reflected the known cash balances of its operating accounts and Regulation W account that were on deposit at Bridge Bank as of the Petition Date (and previously at the Bank), as a receivable from the FDIC. The Debtor does not have access to its account information at Bridge Bank so it could not independently verify the exact amount of funds that were transferred to the FDIC but has used the available information provided by FCB to reflect its best estimate of the amounts that are due to the Debtor.

Note 5: Warrants & Other Derivatives

In connection with negotiated credit facilities and certain other services that were offered by the Bank, the Debtor often acquired equity warrant assets giving the Debtor the right to acquire stock in venture-backed companies primarily in the technology, life science and healthcare industries subject to applicable regulatory limits and, in some cases, equity interests were retained in these companies following their initial public offering. The fair values of these warrants and investments are reflected in the financial statements and are adjusted on a quarterly basis. Fair value changes are recorded as unrealized gains or losses through net income. However, the timing and amount of changes in fair value, if any, of these financial instruments depends on factors beyond the Debtor’s control, including the perceived and actual performance of the companies or funds in which the Debtor invests, fluctuations in the market prices of the preferred or common stock of the portfolio companies, the timing of the receipt of relevant financial information from these companies, market volatility and interest rate fluctuations and legal and contractual restrictions. The valuation processes for warrants are as follows:

Equity warrant assets (public portfolio): Fair value measurements of equity warrant assets of publicly traded portfolio companies are valued based on the Black-Scholes option pricing model. The model uses the price of publicly traded companies (underlying stock price), stated strike prices, warrant expiration dates, the risk-free interest rate and market-observable option volatility assumptions.

Equity warrant assets (private portfolio): Fair value measurements of equity warrant assets of private portfolio companies are priced based on a Black-Scholes option pricing model to estimate the asset value by using stated strike prices, option expiration dates, risk-free interest rates and option volatility assumptions. Option volatility assumptions used in the Black-Scholes model are based on public market indices whose members operate in similar industries as companies in the Debtor’s private company portfolio. Option expiration dates are modified to account for estimates to actual life relative to stated expiration. Overall model asset values are further adjusted for a general lack of liquidity due to the private nature of the associated underlying company.

Note 6: Investment in Subsidiaries

The primary subsidiary business operations of the Debtor during the reporting period are:

SVB Capital Management, LLC

SVB Capital ManCo is the venture capital and credit investment arm of the Debtor, which focuses primarily on funds management. SVB Capital ManCo manages over $9.5 billion of funds on behalf of third party limited partner investors and, on a more limited basis, the Debtor. The SVB Capital family of funds is comprised of pooled investment vehicles such as direct venture funds that invest in companies and funds of funds that invest in other venture capital funds, as well as debt funds that provide lending and other financing solutions. SVB Capital generates income for the Debtor primarily through investment returns (including carried interest) and management fees.

On May 2, 2024, the Debtor announced that it entered into a definitive agreement to sell the SVB Capital business. On May 30, 2024, the Bankruptcy Court approved the Purchase Agreement for the SVB Capital business. For more information, see Order (I) Approving the SVB Capital Purchase Agreement, (II) Approving the Sale of the SVB Capital Business Free and Clear of All Liens, Claims, Interests and Encumbrances, (III) Authorizing Assumption

 

   3   


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Notes and Supporting Documentation  Pg 4 of 6

 

and Assignment of Certain Executory Contracts and (IV) Granting Related Relief [D.I. 1170], entered by the Bankruptcy Court on May 30, 2024. The closing of the sale is subject to customary closing conditions.

SVB Securities Holdings LLC

SVB Securities Holdings LLC consists of two businesses, MoffettNathanson LLC, a sell-side research boutique and SVB Transformation Holdings LLC, a holding company that indirectly holds certain general partner and limited partner interests in Transformation Fund I L.P. and its related entities.

Note 7: Taxes

Taxes receivables reflect a reasonable estimate of current tax refunds due to the Debtor and continue to be evaluated for any required allocations or adjustments.

Note 8: Liabilities Subject to Compromise (Prepetition)

Due to the filing of the Chapter 11 Case on March 17, 2023, the payment of prepetition indebtedness is generally subject to compromise pursuant to a plan of reorganization. Generally, actions to enforce or otherwise effect payment of pre-bankruptcy filing liabilities are stayed. The Debtor has been paying and intends to pay undisputed postpetition liabilities in the ordinary course of business.

Prepetition liabilities that are subject to compromise are required to be reported at the amounts expected to be allowed, even if they may be settled for lesser amounts. The amounts currently classified as Liabilities Subject To Compromise may be subject to future adjustments depending on Bankruptcy Court actions, further developments with respect to disputed claims, determinations of secured status of certain claims, the values of any collateral securing such claims, or other events. The value of the claims that will ultimately be allowed by the Bankruptcy Court cannot be reasonably estimated until the evaluation, investigation and reconciliation of the filed claims has been completed. Any resulting changes in classification will be reflected in subsequent financial statements.

Note 9: Subsequent Events

The Debtor is scheduled to present its Second Amended Plan of Reorganization under Chapter 11 of the Bankruptcy Code [D.I. 1303] (the “Plan”) to the Bankruptcy Court at a hearing commencing on July 24, 2024 to consider confirmation of the Plan. The Debtor and its affiliates have also entered into an agreed restructuring with Transformation Capital Partners, L.P. and its affiliates (together, “TCAP”) effecting (a) a transfer of control of the general partner of Transformation Fund I L.P. and its related entities and (b) an assignment of certain management agreements and related administrative and compliance obligations, in each case to TCAP, to be effective on July 18, 2024.

Note 10: Questionnaire

The workers’ compensation policy that covered employees of FCB who previously performed services for the Debtor was terminated on May 1, 2023. The Debtor has obtained a new workers’ compensation policy through a professional employer organization.

I declare under penalty of perjury that, in my reasonable belief, the foregoing supplemental notes to Monthly Operating Report are true and correct.

 

/s/ Nicholas R. Grossi

Nicholas R. Grossi
Title: Interim Chief Financial Officer
Date: July 22, 2024

 

   4   


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Notes and Supporting Documentation  Pg 5 of 6

 

      Exhibit - 1
In re: SVB Financial Group    Case No.:    23-10367
   Reporting Period:    6/1/2024 - 6/30/2024

Supplemental Statement of Operations

 

     SVB Financial Group        
     Current Month     Cumulative        
     06/01/2024 - 06/30/2024     03/17/2023 - 06/30/2024     Notes  

Income

      

Investment Income

   $ 694,184     $ 14,041,225    

Management Fees

     1,250,000       33,602,536    
  

 

 

   

 

 

   

Total Income

   $ 1,944,184     $ 47,643,761    

Operating Expenses

      

Operating Expenses

     2,237,392       34,168,608    
  

 

 

   

 

 

   

Total Operating Expenses

   $ 2,237,392     $ 34,168,608    
  

 

 

   

 

 

   

Operating Income / (Loss)

   $ (293,208   $ 13,475,153    
  

 

 

   

 

 

   

Other (Income) / Expense

      

Net (Gain) / Loss from Subsidiaries

   $ (6,123,515   $ 106,800,225       [1

Net (Gain) / Loss on Investments

     4,034,494       38,278,501       [1

Vesting of RSUs

     14,069       16,500,462    

Miscellaneous (Income) / Expense

     (127,241     6,027,775    
  

 

 

   

 

 

   

Total Other (Income) / Expense

   $ (2,202,193   $ 167,606,962    
  

 

 

   

 

 

   

Net Income / (Loss) before Reorganization Expenses

   $ 1,908,985     $ (154,131,809  

Reorganization Items, net

     12,102,050       456,773,842    
  

 

 

   

 

 

   

Net Income / (Loss)

   $ (10,193,066   $ (610,905,651  
  

 

 

   

 

 

   

Notes

[1] - Includes both realized and unrealized (gains) / losses.

 

UST Form 11-MOR (12/01/2021)    1   


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Notes and Supporting Documentation  Pg 6 of 6

 

      Exhibit - 2
In re: SVB Financial Group    Case No.:    23-10367
   Reporting Period:    6/30/2024

Supplemental Balance Sheet

 

     SVB Financial Group  
     06/30/2024  

ASSETS

  

Cash

   $ 233,556,002  

Investment Securities

     357,102,129  

Capital Call Line

     —   

Accounts Receivable

     26,813,623  

Receivable from FDIC

     1,933,805,708  

Other Current Assets

     19,515,777  
  

 

 

 

Total Current Assets

   $ 2,570,793,239  

Warrants & Other Derivatives

     310,798,039  

Other Assets

     62,587,745  
  

 

 

 

Total Other Assets

   $ 373,385,784  

Investments in SVB Capital Funds

     471,088,603  

Investment in SVB Securities

     94,814,014  

Investments in Foreign Subs / Other

     17,280,516  
  

 

 

 

Total Investments in Subsidiaries

   $ 583,183,133  
  

 

 

 

TOTAL ASSETS

   $ 3,527,362,156  
  

 

 

 

LIABILITIES & EQUITY

  

Liabilities Not Subject to Compromise

  

Postpetition Payables

     50,720,667  
  

 

 

 

Total Liabilities Not Subject to Compromise

   $ 50,720,667  

Liabilities Subject to Compromise

  

A/P and Accrued Expenses

     81,907,429  

Accrued Interest Payable

     30,159,270  

Other Liabilities

     20,000  

Long-term Debt

     3,370,101,079  
  

 

 

 

Total Liabilities Subject to Compromise

   $ 3,482,187,778  
  

 

 

 

Total Liabilities

   $ 3,532,908,444  

Equity

     (5,546,289
  

 

 

 

TOTAL LIABILITIES & EQUITY

   $ 3,527,362,156  
  

 

 

 

 

UST Form 11-MOR (12/01/2021)    1