Novation, formerly known as NovaStar, filed for Chapter 11 Bankruptcy protection in Baltimore on July 20, 2016 (Case No. 16-19745).
Prior to the 2008 financial crisis, the firm (at that time called NovaStar) “originated, purchased, sold, invested in, securitized and sold subprime mortgage loans and mortgage securities. At its peak, court papers say NovaStar originated more than $11 billion in mortgage loans a year, which it then bundled together into securities that it sold to investors when most people thought housing was a sure thing.”
After the housing bubble burst, NovaStar changed their name to Novation and shifted their focus to investing in companies. Despite this change in name and focus, they are involved at least 3 significant lawsuits tied to the collapse of the housing market. The filing for Chapter 11 protection puts an automatic halt to these actions.
You can read the Wall Street Journal’s article here.
If you have a PacerMonitor account, you can view Novation’s filing here.