Summary of Settlement

On October 31, 2006, the parties agreed on a Master Settlement Agreement that resolves all of the litigation. That settlement agreement was approved by the Thaxton bankruptcy court, by the Finova bankruptcy court, and by the Federal District Court in Anderson, South Carolina. In District Court, approval resulted in the preliminary certification of a class for settlement purposes, followed by a notice which most noteholders received, and then final approval on January 26, 2007.

As we write this, on February 22, we believe that a bankruptcy Disclosure Statement is presently in the mail to noteholders, along with a ballot for the bankruptcy plan. If noteholders vote in favor of the plan, the plan will probably be approved on April 3, and if there are no objections payments could begin about ten days after that. If you support the settlement agreement and the plan, it is important for you to mail in your ballot (but if the plan is approved, you will get your money whether or not you voted).

You can read the settlement agreement by clicking the link at left. It provides for Finova to take some of its money, and give up its remaining claims. We believe it is very likely to result in noteholders receiving about 85% of their money back.

In view of the fact that a related group of companies, Thaxton Life Partners, only paid back about 25 cents on the dollar, we believe this is a very good outcome in a bankruptcy. As attorneys for the class action, we (Gil Bagnell, Randy Eason, Chad McGowan, and Randy Hood) are proud of this result. We also believe the outstanding outcome is the result of teamwork with others involved, including Alan Kolod and Mark Parry of the Moses & Singer firm in New York and Will Cleveland and Charles Summerall from Charleston, bankruptcy attorneys Rick Rayburn and Al Durham from Charlotte and Thaxton's lawyers Gus Dixon and Jim Lehman of Columbia, all of the hardworking employees with Thaxton, the Thaxton family, who have been very supportive of our efforts, and, of course Bob Dunn of the Finley Group in Charlotte, who have restructured Thaxton very successfully. All members of this team contributed significantly to one of the most successful of bankruptcy recoveries, and we are proud to have been part of that team.