Dear Clients and Friends,
As you have likely heard, on Friday, March 10, Silicon Valley Bank (SVB) was closed by the California Department of Financial Protection and Innovation, with the Federal Deposit Insurance Corporation (FDIC) appointed as receiver: https://www.calcalist.co.il/world_news/article/bjgggkkjh.
Below are key takeaways and practical insights based on information currently known:
- Access to funds in SVB deposit accounts – the FDIC has initially frozen withdrawals, but has announced that SVB account holders will be able to access up to USD $250,000 in insured deposits on Monday, March 13. According to the FDIC, online banking and other services will resume by no later than this date. Starting on the first business day after closing, you can verify your insurance status by entering each of your account numbers here: https://resolutions.fdic.gov/claimsportal/s/
- Opening an alternative bank account – for Israeli entities, Bank Leumi, Bank Hapoalim and Discount Bank have announced that they can provide immediate assistance with the opening of new accounts in the United States: https://www.globes.co.il/news/article.aspx?did=1001440940. To the extent you need any assistance with connecting with these banks, or any others, we would be happy to introduce you to them and provide assistance as needed.
- SVB credit facility – the FDIC has frozen all lines of credit and, at this time, they are not currently available to be utilized. The FDIC has advised that you should continue to make your loan payments to the same address as you have in the past. Any client who has an existing credit facility with SVB is encouraged to reach out to us for further guidance and analysis of existing obligations.
- Incoming payments / Notifying customers – we recommend you urgently notify all of your customers of your new account details, and that any and all payments due to you should be made to such new account, effective immediately.
- Outgoing payments – in order to avoid issues with payment processing you should be sure to update any and all standing payment orders such that your payments to third parties is made from another bank account.
- Potential fraud / phishing – please be on high alert for any attempted fraud and/or phishing in connection with your SVB account, particularly with respect to payments and other account activities.
- Banking relationships – if you currently only have a single US bank account, consider opening a second account at another unaffiliated bank to diversify your banking options.
- Run-way – if you have funds locked up and cannot make basic payments, please be sure to update your respective Boards and do not take on new liabilities that you cannot make. If you are in this position or concerned that you might be at risk, you are also encouraged to be proactive and consult with our insolvency experts.
- Public companies – public companies are encouraged to assess whether they are required to submit a statement regarding any potential exposure from the closure of SVB, or lack thereof.
As this is an ongoing and fast-moving situation, we will continue to provide updates and insights as they become apparent.
Should you have any further questions, please do not hesitate to reach out to the Arnon, Tadmor-Levy Venture Lending, Start-ups and Banking Teams.
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