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Novation Companies Objections Filed

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Novation Companies’ official unsecured creditors’ committee and Taberna Preferred Funding I & Taberna Preferred Funding II filed with the U.S. Bankruptcy Court separate objections to the Debtors’ motion for an exclusivity extension.

The committee asserts, “The Committee objects to the Motion, which was filed without any negotiation with or input from the Committee, because cause does not exist to extend the Exclusive Periods….Despite the need to obtain creditor support in connection with any proposed Chapter 11 plan, the Debtors have not engaged in substantive negotiations with the Committee concerning the future of these cases and have failed to provide the Committee with requested information.”

The objection continues, “Specifically, the Debtors are intent on inappropriately gambling almost all remaining estate assets by investing in one or more new businesses to attempt to provide a return to equity holders who have nothing to lose by such a gamble, all to the risk of unsecured creditors, instead of making distributions to creditors as soon as practicable and thereby maximizing the return to creditors in accordance with the Debtors’ fiduciary duties….In addition, extending the Exclusive Periods would not be productive because the Debtors cannot confirm a Chapter 11 plan that would contemplate the Debtors investing the currently liquid assets of Novation in new businesses.”

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