SVB Closure: Public Company Disclosure Considerations – Fund Finance

Key Takeaways:

• Since Friday, March 10, 2023, more than 300 public companies
  have filed current reports on Form 8-K regarding the closure of
  Silicon Valley Bank (“SVB”).




• Company disclosure in these 8-Ks falls essentially into four
  categories: (i) no commercial relationship with SVB; (ii) minimal
  commercial relationship with SVB and minimal exposure to deposit
  risk; (iii) significant commercial relationship with SVB with some
  deposit/loan risk, not anticipated to be material; and (iv)
  significant commercial relationship with SVB with deposit/loan risk
  that is expected to be material.




• While much of the immediate crisis appears to have abated, in
  the days ahead, public companies should be mindful of current and
  potential future disclosure obligations related to the SVB
  receivership.

Since Friday, March 10, 2023, more than 300 public companies
have filed current reports on Form 8-K regarding the closure of
Silicon Valley Bank (“SVB”). Company disclosure in these
8-Ks falls essentially into four categories: (i) no commercial
relationship with SVB; (ii) minimal commercial relationship with
SVB and minimal exposure to deposit risk; (iii) significant
commercial relationship with SVB with some deposit/loan risk, not
anticipated to be material; and (iv) significant commercial
relationship with SVB with deposit/loan risk that is expected to be
material. The overwhelming majority of filings fall into the first
two categories and some companies have amended previously filed
8-Ks to report full access to deposited funds following the
adoption of emergency measures by the Treasury, Federal Reserve and
FDIC.

While much of the immediate crisis appears to have abated, in the
days ahead, public companies should be mindful of current and
potential future disclosure obligations related to the SVB
receivership. Areas to consider include:

• The potential need or desirability of voluntary (Item 7.01)
  Form 8-K disclosure regarding ongoing exposure related to SVB
  accounts to facilitate discussions with stockholders and analysts
  without running afoul of selective disclosure rules.
  

  • Companies should identify areas of focus, such as availability
    of funds under existing credit facilities in which SVB is a lender,
    and determine what is material for purposes of Regulation FD.




• Triggering events requiring Form 8-K filings related to
  existing credit facilities and loan documents such as:
  

  • potential defaults resulting from the transfer of funds out of
    SVB accounts that could trigger an Item 2.03 Form 8-K

  
  

  • termination of SVB agreements that could trigger an Item 1.02
    Form 8-K

  
  

  • removal or replacement of SVB as a lender under a credit
    facility or loan agreement that could trigger an Item 1.01 Form
    8-K




• For companies that have not yet filed their annual reports on
  Form 10-K, consider if additional risk factors are warranted and
  review and update MD&A to reflect any updates to the liquidity
  section. Companies with longer timelines prior to their next
  periodic report may take a wait-and-see approach to assess the
  fallout and avoid the need to correct or amend prior
  disclosures.




• For companies that are engaged in or expect to be engaged in
  registered offerings (or have ATMs or other ongoing offerings),
  consider what disclosure needs to be filed and incorporated into
  effective registration statements to update the company’s
  disclosure, including as to their cash management practices.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.