Finova Group dissolved, cash transferred to notes collateral trustee

By Caroline Salls

Pittsburgh, Nov. 18 - The Finova Group Inc. has dissolved after substantially completing the liquidation of its assets and paying its remaining unrestricted cash to collateral trustee Wilmington Trust Co. for Finova's 7½% senior secured notes due Nov. 15, 2009, according to a company news release.

According to the release, Finova paid $57.8 million to Wilmington Trust, minus a $2 million reserve. The total outstanding principal and interest on the notes is $1.5 billion.

The company said it filed a Certificate of Dissolution with the Secretary of State of Delaware on Tuesday and closed its stock transfer books and stopped recording transfers of its common stock.

Finova said holders of its common stock will not receive any liquidating distributions, but they may have rights to receive distributions related to principal payments on the senior notes, depending upon the results of litigation.

As previously reported, the U.S. Court of Appeals for the Third Circuit entered a judgment on Oct. 21 denying the equity committee's appeal, affirming the rulings of the U.S. Bankruptcy Court for the District of Delaware and the U.S. District Court for the District of Delaware that the company's stockholders were not entitled to distributions under the senior secured notes indenture.

Finova said the equity committee may take its appeal to the U.S. Supreme Court by filing a petition for writ of certiorari by Jan. 19.

In connection with the dissolution, the company said it transferred the $81.2 million of restricted cash that was being held in reserve to the collateral trustee, pending resolution of the equity committee's lawsuit.

If it is ultimately determined that the stockholders are not entitled to the restricted funds, the collateral trustee will transfer the $81.2 million to indenture trustee the Bank of New York for distribution to the senior noteholders.

Scottsdale, Ariz.-based Finova is a financial services holding company that emerged from Chapter 11 bankruptcy in 2001. The company reopened its case in the U.S. Bankruptcy Court for the District of Delaware in December 2006 to sell its remaining assets and to settle some litigation. The Chapter 11 case number is 01-00697.

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