SVB Fallout: How VC-backed Startups May Extend Payroll & Avoid Furloughs

In light of the FDIC takeover of Silicon Valley Bank (SVB), many of our startup, growth company, and fund clients have asked about how to manage their obligations to pay their team members during a period when the company's bank accounts may be frozen. This article also addresses whether to furlough employees and whether employers may have criminal liability for retaining employees on payroll when the employer already may know that it will not make payroll. We are drawing upon our collective experiences working with startups and venture/growth funds, as an employment lawyer, a former Assistant U.S. Attorney (S.D.N.Y), a VC/emerging companies lawyer/Adjunct Professor of Venture Capital, and a prosecutor of employment matters for the D.C. Attorney General's Office.