SVB Closure: Public Company Disclosure Considerations

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.

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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.

We will continue to provide updates on our SVB Developments resource page. Should you need any assistance with the questions above or if you would like assistance considering your specific situation, please contact a member of the Foley Hoag capital markets team.

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