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Who Knew Silicon Valley Was in Manhattan?

posted by Adam Levitin

Silicon Valley Bank's holding company, SVB Financial Group, filed for Chapter 11 bankruptcy this morning...in the Southern District of New York. Who knew that Park Avenue South was in the heart of Silicon Valley?

Seriously, the venue here looks problematic. SVB Financial Group's petition lists its principal place of business as 387 Park Avenue South, Manhattan. There's a SVB location there with about 20,000 square foot of space. That's sure doesn't seem like a corporate headquarters for the 16th largest bank holding company in the US. Instead, it seems to be more of a bank branch. But the petition does bear the signatures, under penalty of perjury, of SVB Financial Group's CRO and, not so clearly under penalty of perjury, of SVB Financial Group's attorney at Sullivan & Cromwell. 

Curiously, SVB Financial Group has been telling federal bank regulators a different story about where it's located. On its Bank Holding Company Report, Systemic Risk Report, Consolidated Financial Statement, and Parent Company Only Financial Statement for Large Bank Holding Companies—documents filed with the Federal Reserve Board—SVB Financial Group said its address is 3003 Tasman Drive, Santa Clara, California. Hmmm.

Did SVB Financial Group quietly relocate to SDNY since those Fed filings? If so, venue wouldn't be appropriate under the 180 day rule for venue. Or did SVB Financial Group just decide that SDNY would be a more friendly venue than NDCal? Or maybe it was just an oversight, like including a proposed board resolution to authorize the bankruptcy filing, rather than an actual approved board resolution authorizing the filing in the bankruptcy petition.

From what I can tell, SVB Financial Group's bankruptcy does not have any clear legal basis for being in SDNY. It isn't incorporated in NY. It doesn't have an affiliate with a bankruptcy pending in NY. It does not have its principal assets in NY. And it does not appear to actually have its principal place of business in NY. I hope there's some questions asked about this issue at the first day hearing, whether by creditors, the US Trustee, or the judge. 

Update 1: It's been pointed out to me that the CRO declaration with the petition says that the proposed board resolution was adopted. But why not just file the approved resolution, rather than a hearsay document?

Update 2: Could SVB Financial Group be claiming venue based on its deposit being at the NY branch of SVB? I don't think so. First, I'm not sure that there's been $2B on deposit anywhere for 180 days (or that those have been the principal assets for 180 days). And second, a general deposit is not "located" at a particular branch. A general deposit is a general intangible that doesn't have a "location" unlike a tangible safe deposit box. So this looks to me like "Venue by Declaration®" to use Bob Lawless's phrase. I really do hope that we get some clarity on the situation at the first day hearing. 


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