Nova Financial plans to file Chapter 7 bankruptcy, begin liquidation

By Caroline Salls

Pittsburgh, Oct. 31 - Nova Financial Holdings, Inc. plans to file Chapter 7 bankruptcy and begin the liquidation process, according to a news release.

Nova said it had been following a plan, which was adopted in 2010 in conjunction with an agreement with the Federal Reserve Bank of Philadelphia, to strengthen its capital base.

Despite the progress achieved across a breadth of objectives established in the plan, the company said the ongoing effects of the weak economy negatively impacted its capital position.

In the plan, Nova also agreed to raise additional capital. However, the company said it was unable to complete the capital raise because of the filing of "ill-conceived lawsuits by a few disgruntled shareholders."

The company said it attempted to settle the shareholder lawsuits, but shareholders summarily rejected all of those attempts.

Ultimately, Nova said the unresolved litigation created enough ongoing uncertainty throughout the investment community that negotiations with investor groups were unsuccessful.

Nova is a Berwyn, Pa.-based bank holding company.

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