SVB’s biggest debtor in Canada is Michele Romanow’s tech finance firm

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The bankruptcy liquidator in charge of Silicon Valley Bank’s Canadian unit is set to receive offers for its loan book on May 29, and the biggest asset is a loan to e-commerce lender Clear Finance Technology Corp., according to people with knowledge of the matter .

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Toronto-based Clear Finance, which operates under the name Clearco, is an alternative lender that offers cash advances to e-commerce and software startups. It’s struggling amid the tech sector downturn after its cost of capital soared. The company has done extensive staff cuts and excited markets outside North America.

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Clear Finance was co-founded by Michele Romanow, who came up with the idea after appearing on “Dragons’ Den” — the Canadian television show that inspired “Shark Tank,” in which investors get pitched business ideas by contestants. The firm is in the process of raising equity and its investors need assurances on the status of the loan before signing off on a deal, one of the people said. The company declined to comment.

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SVB Canada has about 200 borrowers, primarily in the technology, life sciences and clean technology industries, the people said, speaking on condition they are not named because the matter is still private.

The portfolio consists of term loans, revolving credit lines, and venture capital and private equity call facilities, according to documents filed by the liquidator, PricewaterhouseCoopers, which did not immediately respond to a request for comment on May 26. Potential bidders who’ve been looking at the assets say the loan portfolio doesn’t appear to be in good shape, the people said.

Silicon Valley Bank crumbled in early March when its capital-raising plans failed, leaving it exposed to a bank run in which depositors tried to pull out US$42 billion in one day.

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Canada’s banking regulator, the Office of the Superintendent of Financial Institutions, took control of SVB’s local branch on March 12 and days later got a court order to wind up the operation, appointing PricewaterhouseCoopers to oversee it. The portfolio wasn’t included in the sale of SVB assets to First Citizens BancShares Inc.

SVB Canada, which had a license to lend but could not accept retail deposits, was small — it had just US$301.3 million in outstanding loans as of April 11, according to a report by PwC.

But capital commitments to its existing debtors are creating uncertainty for potential bidders, according to the people.

The second phase of the bidding took place on June 26, according to a document posted to PwC’s website.

Bloomberg.com

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