Bank Receivership

On Tuesday, March 21, at 5:00 p.m. CT, Foley hosted a webinar where a panel of presenters discussed the latest updates and practical considerations regarding Bank Receivership. Read our key takeaways here.

Following the bank receivership of Silicon Valley Bank (SVB) and similar situations with other stressed financial institutions in the U.S. and Europe, companies are concerned with their international assets and credits held by banking and non-banking institutions overseas. The concern in Mexico is augmented due to the interconnection of the U.S. and Mexican economies.

Cash is the lifeblood of any business. Venture-backed companies without a financial history or proven track record are often unable to qualify for a more traditional loan with a big bank.

The closure of Silicon Valley Bank and Signature Bank, and the subsequent receivership by the Federal Deposit Insurance Corporation, has far-reaching effects, including to commercial real estate transactions in which these banks are involved.

On March 10, 2023, the California Department of Financial Protection and Innovation closed Silicon Valley Bank. Upon closure, the DFPI appointed the Federal Deposit Insurance Corporation as receiver.

The collapse of Silicon Valley Bank and Signature Bank on March 10 and 12, 2023, respectively, sent shockwaves through the venture capital, entrepreneur, technology innovation, and life sciences communities, as well as those companies that regularly rely on bank credit commitments to fund operations and working capital.

While the FDIC and the Treasury Department have since stepped in to ensure that all deposits are protected, the Silicon Valley Bank collapse is an opportunity for corporate directors and officers to reassess their current risks relating to cash management and investment policies in the current environment of economic uncertainty.

On March 10, 2023, the California Department of Financial Protection and Innovation closed Silicon Valley Bank (SVB). Though many questions remain, we have provided some brief insights on the status of deposits in banks taken over by the FDIC based on currently released information.

We have prepared the following FAQs to address some of the most common concerns that arose among employers concerned about access to liquidity in light of recent bank failures.