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Novation Companies Compromise Approved

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The U.S. Bankruptcy Court issued an order approving Novation Companies’ settlement and compromise of controversy with the New Jersey Carpenters Health Fund.

As previously reported, “The key terms of the Settlement Agreement are as follows: The Settlement Class shall include all persons and entities who purchased or otherwise acquired publicly offered certificates representing interests in any of six NovaStar Mortgage Funding Trusts, NovaStar Home Equity Loan (‘NHEL’) Series 2006-3, Series 2006-4, Series 2006-5, Series 2006-6, Series 2007-1 and Series 2007-2 (the ‘NovaStar Trusts’ or ‘Issuing Trusts’) prior to May 21, 2008, pursuant or traceable to the Registration Statement and accompanying Prospectus filed with the SEC by NovaStar Mortgage Funding Corporation on June 16, 2006 (No. 333-134461) (the ‘Registration Statement’) and who were damaged thereby.”

In addition, “The Defendants and/or their insurers shall pay or cause to be paid their respective allocated portions of the Settlement Amount of $165 million, severally and not jointly, according to the allocation terms determined by the Defendants and their insurers, into a mutually agreeable escrow….As part of the settlement, the Debtors request authorization for the Insurers to pay the Insured Payment, in the aggregate amount of $11,000,000, which the Insurers have agreed to fund. The Insured Payment would be applied against the limits of a total of $30,000,000 of excess directors and officers’ liability insurance coverage originally issued by the Insurers.”

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