Oak Tree Capital and other distressed asset investment giants propose to acquire deposits from Silicon Valley Bank's startups at a discount

ChainCatcher news, U.S. financial media Semafor cited informed sources reporting that hedge funds are proposing to acquire deposits from Silicon Valley Bank (SVB) startups at prices as low as 60% of face value. After SVB was taken over by the Federal Deposit Insurance Corporation, well-known distressed debt investment firm Oaktree Capital began reaching out to startups for assistance.

The report indicates that this bidding range reflects the expectations of how much uninsured deposits will ultimately be recovered once the bank's assets are sold or liquidated. According to the bank's filing documents, as of December 31, approximately 96% of SVB's deposits were uninsured, a figure significantly higher than that of typical banks.

Additionally, The Information previously reported that traders from investment bank Jefferies are also contacting founders of startups with trapped funds, offering to purchase their deposit claims at a discount. (source link)