March 29, 2023

SVB Collapse: Disclosure Issues for Public Companies

In the wake of the collapse of SVB and the resulting uncertainties in the banking sector, public companies need to give some thought to what they need to say about the implications of the current environment on their businesses in their SEC filings and other public disclosures.  This Mayer Brown memo addresses those issues,and highlights specific line-item requirements that may trigger disclosures.  Here’s an excerpt from the memo’s discussion of MD&A disclosure considerations:

Overall, there are many possible questions for companies in assessing the materiality of the bank failures as they prepare their MD&As. For example, have the bank failures affected liquidity? Has the company drawn down on bank facilities for any reason, including because it has not been able to access the capital markets? Is the company party to contracts with “Defaulting Lender” provisions that are or may be triggered by the banks’ failures, and, if so, is that having a material impact on the company’s business? Has the company experienced problems within its supply chain or distribution networks, and, if so, are such issues anticipated to be ongoing?

Other potentially applicable Reg S-K line-item disclosure requirements addressed in the memo include risk factors, business, legal proceeding, exhibits and disclosure controls & procedures. The memo also reviews potential financial statement impacts of disruption in the banking sector, as well as the possible need for some companies to consider Form 8-K filings.

John Jenkins