Novation is on a prepackaged reorganization path built around sponsor-backed recapitalization, preservation of tax attributes, and treatment of its secured noteholder debt, with no later confirmation or effective-date posture supplied in the context pack. The case began on August 13, 2023, when Novation Companies, Inc. filed chapter 11 in Delaware alongside affiliates including Novation Holding, Healthcare Staffing, and NovaStar Mortgage, after a long deterioration from its former mortgage-securities business into a much smaller healthcare-staffing platform, as described in the Wyse first-day declarationDkt. 2.
The filing followed operational and financial contraction at Healthcare Staffing, where staffing employees fell from 375 in the second quarter of 2022 to about 60 at filing, monthly revenue declined from $2.7 million in January 2022 to $0.1 million by December 2022, and losses continued into 2023. The same declaration ties the chapter 11 filing to a capital structure anchored by roughly $97.8 million outstanding under 2017 senior secured notes, significant net operating loss carryforwards, and a marketing process begun in January 2022 that led to an August 4, 2023 restructuring support agreement with Nighthawks Holdings I, LLC and HOMF II Distressed Opportunities, Ltd. Wyse first-day declarationDkt. 2.
The debtor filed with a joint prepackaged plan rather than a free-fall sale process: the Joint Prepackaged Plan of ReorganizationDkt. 13 provides for a reorganization across seven classes, with noteholders as the only impaired voting class reflected in the context pack, while the first-day declaration describes the economic framework as giving noteholders 52.5% of reorganized common stock plus preferred stock and potential cash consideration, and plan sponsors 47.5% of reorganized common stock. The available record therefore frames the case as a balance-sheet and ownership restructuring meant to stabilize a diminished operating platform and preserve tax attributes, not as an asset liquidation.
