Jerrold Bregman Talks to Bloomberg About Silicon Valley Bank’s Loan Covenants

Jerrold Bregman spoke with Bloomberg about Silicon Valley Bank’s (SVB) loan covenants, now that SVB is asking depositors to come back after a run on the bank occurred during its failure. The article examines how some depositors “may not have much of a choice” due to their loan covenants, which could stipulate that they are required to keep all or a portion of their cash with the lender. Pending the outcome of SVB’s collapse, future owners of the loans could demand immediate repayment of the debt if such a breach of lending terms is not remedied.

“I don’t think that it’s a bad move to have taken money out,” Jerry explained, “The question is whether they should put money back in, and I think that’s going to have to be decided in each case based on the borrower’s relationship with whoever the lender party turns out to be.”

The article later explains that many companies that banked with SVB are now in a “limbo” situation where they’re waiting to see what comes from the regulatory takeover. Jerry added that SVB borrowers should be “trying to obtain some assurance of the continued lending relationship, and if they can’t get reasonable assurances and get comfortable around that, it may be an appropriate decision to risk violating the covenant.”  

Click here to read the full article: Bloomberg (Subscribers only)