The US Bankruptcy Court gave an order to Novation Companies, Inc. to obtain DIP financing on a final basis on September 11, 2023. As per the order, the debtor has been authorized to obtain a term loan facility in the amount of $1.77 million from Nighthawks Holdings I, LLC and HOMF II Distressed Opportunities, Ltd. acting as lender and administrative agent. The DIP loan would either carry an interest rate of 13% p.a., along with an additional 3% p.a. interest in the event of default.

As per the terms of the DIP agreement, there is a DIP credit facility fee equal to $106,200. The DIP facility would mature either on 90 days i.e., November 11, 2023, or on the effective date of the plan or on the date of consummation of the sale of substantially all assets, whichever is earlier. Adequate protection would be provided to the DIP lenders in the form of super-priority administrative expense claims which is subject to a carve-out of $0.05 million towards unpaid professional fees / administrative expenses and first priority lien upon and security interest in the debtor?s collateral.

The proceeds of DIP financing shall be used to pay the fees owed to the Lenders whether or not set forth in the budget, to pay certain costs, premiums, fees and expenses related to the cases, to fund working capital and other needs of the Debtors in accordance with the Budget.