Finova Group, a $ 14000000000 commercial finance company bankruptcy under Chapter 11 in early March 2001, in what was one of the largest U.S. bankruptcy filings of all time and the largest corporate bond default since the Great Depression. While in Chapter 11, Finova was the subject of a heated bidding contest. Under the last accepted plan of reorganization sponsored “Berkadia” (partnership of Leucadia National Corp. and value investor Warren Buffet Bershire Hathaway) a massive recapitalization of the … Read more »

Finova Group, a $ 14000000000 commercial finance company bankruptcy under Chapter 11 in early March 2001, in what was one of the largest U.S. bankruptcy filings of all time and the largest corporate bond default since the Great Depression. While in Chapter 11, Finova was the subject of a heated bidding contest. Under the last accepted plan of reorganization sponsored “Berkadia” (partnership of Leucadia National Corp. and value investor Warren Buffet Bershire Hathaway) a massive recapitalization of Finova and offers a secured loan of $ 6 billion to buy the bank and unsecured bondholders. In return Berkadia received 51% of the reorganized company’s common shares and control of the board of directors. No new business development was planned. A number of companies represented in the case, however, believed that the company may have significant going concern value, and were concerned that Berkadia would acquire the company at an artificially low price. Were during the bankruptcy, a large part of Finova of debt and equity claims bought by so-called “vulture investors” who hoped to influence the outcome of the dispute.
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from
Stuart C. Gilson,
Perry L. Fagan
Source: Harvard Business School
25 pages.
Publication Date: Jan 22, 2002. Prod #: 202095-PDF-ENG
Finova Group, Inc. (A) HBR case solution

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