What We’re Reading This Week [March 17, 2023]
On March 17th, the New York Times reported that SVB Financial Group, the parent company of Silicon Valley Bank, filed for bankruptcy in the Southern District of New York. The filing comes shortly after Silicon Valley Bank was seized by the Federal Deposit Insurance Corporation, following a recent run on deposits. SVB’s collapse is the second largest in U.S. history and the largest since the financial crisis in 2008. Silicon Valley Bank’s Parent Company Files for Bankruptcy – The New York Times (nytimes.com)
On March 15th, The Hill reported that Democrats Elizabeth Warren (from Massachusetts) and Katie Porter (from California) have introduced a new bill, the “Secure Viable Banking Act,” to repeal part of a Trump-era bank regulation rollback law, in the wake of the Silicon Valley Bank collapse. If enacted, the Secure Viable Banking Act would put banks holding at least $50 billion in assets under stricter oversight by the Federal Reserve (i.e., at a level more akin to their larger bank brethren). This would effectively roll back the 2018 bill that loosened Dodd-Frank regulations by increasing the oversight threshold to $250 billion (thereby exempting banks such as Silicon Valley from the strictest level of oversight). While such bill has widespread support among Democrats in the House and the Senate, Republicans are generally opposed to tightening bank rules, and point to other reasons for the deterioration of Silicon Valley Bank. Warren, Porter unveil bill to undo Trump-era Dodd-Frank rollback after Silicon Valley Bank collapse | The Hill
Business Insider reported on March 15th, that Diamond Sports Group, the largest broadcaster of local sports in the US, has filed for bankruptcy. The subsidiary of local TV giant Sinclair Broadcast Group, filed in the Southern District of Texas. The decision to file came after the company missed a $140 million interest payment last month as regional sports networks (or “RSNs”) have been shrinking due to “cord-cutting” and increased streaming practices. The company reported $8 billion in debt. Diamond Sports operates Bally RSNs, responsible for broadcasting games for 14 NBA teams, 14 MLB teams and 12 NHL teams. Diamond Sports has indicated that it expects to operate normally during the restructuring and that it is already in negotiations for a restructuring agreement (that would result in Diamond being separated from the larger Sinclair Broadcast Group). Diamond Sports Group, Largest Sports Broadcaster in the US, Files for Bankruptcy (businessinsider.com)
On March 15th, the Wall Street Journal reported that AMC Entertainment Holdings Inc., received shareholder approval to sell more stock. Specifically, shareholders authorized the company to increase the number of common shares that AMC can sell as well as a 10-for-1 reverse stock split that will likely allow it to convert its preferred units into common shares. In 2021, AMC had created a new class of securities called “AMC Preferred Equity units,” or “APEs”, each amounting to one-hundredth of a preferred shared. A Pennsylvania-based pension fund subsequently sued the company in Delaware, alleging that AMC stripped common shareholders of their rights by granting voting powers to these APE units. The Company nonetheless continued with its proposal due to its stunted recovery: despite rebounding from the worst days of the COVID-19 pandemic, AMC still posted a nearly $1 billion net loss for 2022. As of December 31st, it had approximately $631 million of cash, far down from the nearly $1.6 billion it had at the end of 2021. AMC Secures Shareholder Approval to Sell More Stock – WSJ
