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SVB Financial Group said today that it filed chapter 11 protection to seek buyers for its assets, days after its former unit Silicon Valley Bank was taken over by U.S. regulators, Reuters reported. The move to commence bankruptcy proceedings comes as emergency measures to shore up confidence have so far failed to dispel worries about a financial contagion. Californian regulators shuttered Silicon Valley Bank last Friday, making it the largest collapse since Washington Mutual went bust during the financial crisis of 2008. The tech lender was forced to sell a portfolio of treasuries and mortgage-backed securities to Goldman Sachs at a $1.8 billion loss after a rise in yields eroded value. To plug that hole, it attempted to raise $2.25 billion in common equity and preferred convertible stock but spooked clients pulled deposits from the bank that led to $42 billion of outflows in a day. Earlier this week, the defunct lender said it was planning to explore strategic alternatives for its businesses including the holding company, SVB Capital and SVB Securities. SVB Securities and SVB Capital's funds and general partner entities are not included in the chapter 11 filing, the company said on Friday, adding it planned to proceed with the process to evaluate alternatives for the businesses, as well its other assets and investments.

Bankruptcy Judge Michael Wiles declined to delay the $1.3 billion sale of crypto lender Voyager Digital to Binance.US, saying that Voyager customers should not be forced to wait out a challenge by the Department of Justice that is unlikely to succeed, Reuters reported. Judge Wiles ruled on Wednesday that the department had mischaracterized the scope of legal protections he had granted to Voyager employees for actions to carry out the sale and rebalance its crypto portfolio. Judge Wiles, who is overseeing Voyager's chapter 11 process, approved its bankruptcy plan last week. The government can "can step in at any time" if it believes illegal transactions are happening, but has not presented any evidence that Voyager's crypto transactions are illegal, Judge Wiles said. The U.S. Attorney's Office for the Southern District of New York and the Office of the U.S. Trustee, the Justice Department's bankruptcy watchdog, both filed appeals last week. They argued that the protections could rubber stamp crypto transactions that might be illegal under U.S. securities laws.

Major League Baseball warned America’s biggest local broadcaster of professional sports games that it must televise hundreds of upcoming baseball games — and pay the related fees — even though the company is in bankruptcy, Bloomberg News reported. Two weeks before baseball season starts, Diamond Sports Group has not said whether it will televise games for the 14 teams it has contracts with, MLB attorney James Bromley told the judge overseeing Diamond’s bankruptcy case. Through its Bally Sports brand, Diamond is obligated to broadcast an average of 150 games for each of those teams, Bromley said during a court hearing held by video on Thursday afternoon. “We are very concerned because opening day is just two weeks away,” Bromley said. If Diamond fails to pay any of the fees associated with the games, MLB will ask US Bankruptcy Judge Christopher Lopez to take action, Bromley said. Diamond has the money to broadcast all the basketball and hockey games left for the year under its agreements with those sports leagues, company lawyer Andrew Goldman said during the hearing. He didn’t say whether the company plans to broadcast the baseball games. Diamond filed bankruptcy on Tuesday in Houston, with a proposal to cut more than $8 billion in debt by giving ownership of the company to creditors.

Bankrupt cryptocurrency exchange FTX made transfers of about $2.2 billion to company founder Sam Bankman-Fried through related entities, the company's new management said, Reuters reported. Overall more than $3.2 billion was transferred through payments and loans to company founders and key employees, FTX said in a statement on Wednesday. These payments were made chiefly from Alameda Research hedge fund, FTX said, adding that it made these disclosures by filing schedules and statements of financial affairs with the bankruptcy court. The crypto exchange said the transfers did not include over $240 million spent to purchase luxury property in the Bahamas, political and charitable donations made directly by the FTX debtors, and substantial transfers to non-debtor units in the Bahamas and other jurisdictions.

The city of Chester, Pa., can proceed to restructure in bankruptcy despite objections from its own elected officials and its biggest bondholder, a bankruptcy judge ruled, WSJ Pro Bankruptcy reported. The city “satisfies all the statutory requirements” as a municipality to restructure under chapter 9 bankruptcy, Judge Ashely Chan of the U.S. Bankruptcy Court in Philadelphia said in a written opinion on Tuesday. Chester’s filing in November marked the largest U.S. municipal bankruptcy since the 2017 filing by Puerto Rico. The city has struggled to keep up with its debt payments, including to Preston Hollow Community Capital LLC, which holds $19.2 million of the city’s 2017 municipal bonds. Preston Hollow objected to the city’s chapter 9 eligibility, arguing that the city failed to engage in the good-faith negotiations with creditors required by the bankruptcy code. On Tuesday Judge Chan disagreed, saying the record shows the city made efforts to negotiate with its major creditors, including its three unions and Preston Hollow, before filing for bankruptcy. Chester’s mayor and city council members also questioned the validity of the bankruptcy petition, asserting that the filing wasn’t voluntary because the city’s elected officials “did not authorize” it.

The Roman Catholic Diocese of Albany announced Wednesday it has filed for chapter 11 protection, CBSAlbany.com reported. Under a chapter 11 status, this means all legal actions against the diocese will pause, including lawsuits involving St. Clare's pensioners. The diocese contends that the St. Clare's crisis was not the reason for filing under chapter 11. In a statement, Bishop Edward Scharfenberger pointed to the Child Victims Act resulting in large settlements, leaving insurance coffers depleted. The diocese said that the bankruptcy filing does not affect parishes and Catholic schools are separately incorporated under New York State’s Religious Corporations Law.

U.S. officials are trying to block key parts of the sale of bankrupt Voyager Digital Ltd. to Binance.US, the American arm of the world’s biggest crypto exchange, while the government appeals a judge’s approval of the deal, Bloomberg News reported. he government opposes any limits on its ability to punish anyone involved in the proposal and a related bankruptcy-exit plan that Bankruptcy Judge Michael E. Wiles approved last week, a Justice Department lawyer said in court yesterday. Other aspects of the deal could go forward, but not the legal protections included as part of Voyager’s chapter 11 plan, Assistant U.S. Attorney Larry Fogleman told Wiles. Wiles agreed to hold a hearing Wednesday to decide whether to block the plan’s exculpation provisions. The provisions, which are routine in corporate bankruptcy cases, protect people from being held personally liable for implementing a court-approved plan. Under its bankruptcy plan, Voyager has the option of selling itself to Binance.US or liquidating its assets and distributing the money to creditors. Judge Wiles gave the company permission to do either after four days of contentious bankruptcy hearings.

Since at least 2009, McKinsey & Co. has been a consultant to the U.S. Department of Veterans Affairs, the federal agency that oversees healthcare for millions of retired military service members. During part of that time, the consulting giant also advised some of the world’s biggest opioid producers to target the agency for sales of their products, according to newly released documents, WSJ Pro Bankruptcy reported. The firm advised opioid companies including Purdue Pharma LP and Endo International PLC on how to increase sales to the VA through both new and existing channels, the documents show. Meanwhile, McKinsey earned at least $117 million consulting for the VA, primarily on matters related to healthcare services for veterans, according to government records. Purdue and Endo both filed for bankruptcy in recent years to shield themselves from mass lawsuits alleging they fueled the opioid crisis, while McKinsey’s work for those companies and others subjected it to litigation of its own. The firm in 2021 reached a $642 million settlement of opioid-related lawsuits from all 50 state attorneys general, in which it didn’t admit wrongdoing. It agreed in the settlement to make public certain documents concerning its past work for opioid companies and began releasing records last year. The documents establish that McKinsey identified the VA as an important sales target for its corporate clients in the opioid industry, at a time that the firm also did consulting work for the agency.

U.S. regulators took control of a second bank Sunday and announced emergency measures to ease fears depositors might pull their money from smaller lenders after the swift collapse late last week of Silicon Valley Bank, the Wall Street Journal reported. The measures, which include guaranteeing all deposits of SVB, were designed to shore up wavering confidence in the banking system. They were jointly announced Sunday night by the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corp. Regulators announced they had taken control of Signature Bank, one of the main banks for cryptocurrency companies, on Sunday. The New York bank’s depositors will be made whole, officials said. A senior Treasury official said that the steps didn’t constitute a bailout because stock and bondholders in SVB and Signature wouldn’t be protected. The Fed and Treasury separately said they would use emergency-lending authorities to make more funds available to meet demands for bank withdrawals, an additional effort to prevent runs on other banks. Read more. (Subscription required.)

In related news, bankrupt crypto lender BlockFi Inc. faces risks of having its funds locked up at Silicon Valley Bank, which collapsed Friday after a run on deposits doomed the bank’s plans to raise fresh capital, WSJ Pro Bankruptcy reported. BlockFi, which filed for bankruptcy in November, had roughly $227 million in unprotected funds at the bank, the U.S. Trustee, a unit at the Justice Department overseeing bankruptcies, said in a court filing Friday. The federal watchdog said Silicon Valley Bank documents clearly show the BlockFi account isn’t considered a deposit, isn’t insured by the Federal Deposit Insurance Corp., and might lose value. BlockFi ignored warnings earlier this month about the dangers of the uninsured account, the federal watchdog said. The watchdog said it had urged BlockFi to show that it has taken steps to safeguard the money that was held in the unprotected money-market mutual fund at the bank. Silicon Valley Bank is a popular bank for deposits, lending and other services for businesses in chapter 11, court documents show, adding another dimension to the bank’s collapse that marks the second-biggest failure in a financial services firm in U.S. history. Read more.