Companies will be affected in a variety of ways by the receivership of Signature Bank, SVB and any other similarly situated financial institution. Companies may face difficulty accessing cash deposits, bank facilities or the capital markets or limitations on money market transactions or commercial paper facilities.
Companies may also face losses on investments, especially those tied to the affected financial institutions or invested in broader investments tied to financial institutions generally. Resulting liquidity constraints may lead to difficult decisions, including prioritizing the uses of limited cash. The constituents of many companies may be affected, including employees, suppliers, lenders and customers. The effects may also impact shareholders.
Read the complete article on the Harvard Law School Forum of Corporate Governance.