Barely a week after the Silicon Valley Bank was shut down, its parent firm SVB Financial Group has filed for Chapter 11 bankruptcy.
What is it aiming for?
The provision in the US Bankruptcy Code, allows the debtor to propose a reorganisation plan for its business, in the best interests of creditors.
SVB Financial is going for a court-supervised reorganisation, while looking for buyers to bid for its assets.
How will Chapter 11 help SVB?
It is used when a company wants to make changes to its structures after going bankrupt, to survive without going out of business.
The plan for reorganisation under Chapter 11 bankruptcy can also be submitted by creditors if the bankrupt firm doesn't have one.
Simply put, SVB Financial wants to avoid going out of business and seeks to buy time for paying off creditors in installments.
What's in store for Indian banks?
Although startups in India had deposited money in Silicon Valley Bank, the Reserve Bank of India's Governor Shaktikanta Das said that the country's lenders aren't affected.
Das expressed confidence that India's banking system is stable and resilient to global tremors caused by the SVB fall.
The RBI boss added that India doesn't have to fear since its external debt is manageable and the US dollar's rise won't affect the local economy.
