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Novation Companies Chapter 11 Bankruptcy Petition Filed

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Novation Companies (f/k/a NovaStar Financial) and three subsidiaries filed for Chapter 11 protection with the U.S. Bankruptcy Court in the District of Maryland, lead case number 16-19745. The Company, which was previously involved in real estate lending but more recently in acquiring various businesses, is represented by Joel I. Sher of Shapiro Sher Guinot & Sandler.

According to a corporate release, “Novation’s board of directors unanimously determined that a chapter 11 reorganization is in the best interest of the Company and its stakeholders….Novation has significant liquid assets and net operating losses that the Company expects to preserve during the chapter 11 process.”

Novation Companies has engaged a financial advisor to review all financial and strategic alternatives, and the Company is seeking to acquire a profitable operating business in order to maximize its return to all creditors and stakeholders. The release notes, “The Company will seek to restructure its obligations or have its obligations, primarily those under its senior unsecured notes, reinstated. The Company also intends to vigorously defend and seek to determine the claims asserted in existing lawsuits for which the Company and its subsidiaries believe they have meritorious defenses.”

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