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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549





FORM 10-Q







|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended March 31, 2009

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from                      to

Commission
file number 001-11011





THE FINOVA GROUP INC.

(Exact name of
registrant as specified in its charter)







|                                                              |  |                                     
|------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                      |  | 86-0695381                          
|(State or other jurisdiction of incorporation ororganization) |  | (I.R.S. employer identification no.)



|                                                 |  |           
|------------------------------------------------ |  | ----------
|8320 North Hayden Road, Suite C112Scottsdale, AZ |  | 85258     
|(Address of principal executive offices)         |  | (Zip code)

Registrants telephone number, including area code: 480-624-4988

N/A

(Former name, former address and
former fiscal year, if changed since last report)





Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, (or for such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.    Yes  x    No   ̈

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files.)    Yes   ̈    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of large accelerated filer, accelerated filer
and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer   ̈         Accelerated filer   ̈         Non-accelerated filer   ̈        Smaller reporting company  x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   ̈    No  x

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS

DURING THE PRECEDING FIVE YEARS:

Indicate by check
mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by the
court.    Yes  x    No   ̈

APPLICABLE ONLY TO CORPORATE ISSUERS:

As of May 4, 2009, approximately 122,041,000 shares of Common Stock
($0.01 par value) were outstanding.









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##### Table of Contents

THE FINOVA GROUP INC.

TABLE OF CONTENTS



|           |  |                                                                                                                                                     |  |         
|---------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------
|           |  |                                                                                                                                                     |  | Page No.
|           |  |                                                                                                                                                    
|           |  | PART I FINANCIAL INFORMATION                                                                                                                        |  |         
|           |  |                                                                                                                                                    
|Item 1.    |  | Financial Statements                                                                                                                                |  | 1       
|           |  |                                                                                                                                                    
|           |  | Consolidated Statements of Net Assets in Liquidation (liquidation basis) at March 31, 2009 (unaudited) and December 31,
 2008                       |  | 1       
|           |  |                                                                                                                                                    
|           |  | Consolidated Statements of Changes in Net Assets in Liquidation (liquidation basis) (unaudited) for the Three Months Ended
 March 31, 2009 and 2008 |  | 2       
|           |  |                                                                                                                                                    
|           |  | Notes to Interim Condensed Consolidated Financial Statements (unaudited)                                                                            |  | 3       
|           |  |                                                                                                                                                    
|Item 2.    |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                                               |  | 10      
|           |  |                                                                                                                                                    
|           |  | Special Note Regarding Forward-Looking Statements                                                                                                   |  | 17      
|           |  |                                                                                                                                                    
|Item 4T.   |  | Controls and Procedures                                                                                                                             |  | 17      
|           |  |                                                                                                                                                    
|           |  | PART II OTHER INFORMATION                                                                                                                           |  |         
|           |  |                                                                                                                                                    
|Item 1.    |  | Legal Proceedings                                                                                                                                   |  | 18      
|           |  |                                                                                                                                                    
|Item 1A.   |  | Risk Factors                                                                                                                                        |  | 18      
|           |  |                                                                                                                                                    
|Item 6.    |  | Exhibits                                                                                                                                            |  | 18      
|           | 
|Signatures |  | 19                                                                                                                                                 



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##### Table of Contents

PART I FINANCIAL INFORMATION



|Item 1. | Financial Statements
|------- | --------------------

THE FINOVA GROUP INC.

CONSOLIDATED STATEMENTS OF NET ASSETS IN LIQUIDATION (LIQUIDATION BASIS)

(Dollars in thousands)



|                                                                                       |  |                           |         |                            |   |        
|-------------------------------------------------------------------------------------- |  | ------------------------- | ------- | -------------------------- | - | -------
|                                                                                       |  | March 31, 2009(Unaudited) |         | December 31, 2008(Audited)
|ASSETS                                                                                 |  |                           |         |                            |   |        
|Cash and cash equivalents                                                              |  | $                         | 63,065  |                            | $ | 65,914 
|Restricted cashimpermissible restricted payments                                      |  |                           | 81,228  |                            |   | 81,228 
|Liquidating portfolio                                                                  |  |                           | 262     |                            |   | 505    
|Other assets and deposits                                                              |  |                           | 649     |                            |   | 759    
|                                                                                       |  |                           |         |                            |   |        
|Total Assets                                                                           |  | $                         | 145,204 |                            | $ | 148,406
|                                                                                       |  |                           |         |                            |   |        
|                                                                                       |  |                          
|LIABILITIES (excluding Senior Notes)                                                   |  |                           |         |                            |   |        
|Interest payable on the Senior Notes                                                   |  | $                         | 40,351  |                            | $ | 13,648 
|Reserve for estimated costs during the liquidation period                              |  |                           | 5,565   |                            |   | 8,906  
|                                                                                       |  |                           |         |                            |   |        
|Total Liabilities (excluding Senior Notes)                                             |  |                           | 45,916  |                            |   | 22,554 
|                                                                                       |  |                           |         |                            |   |        
|                                                                                       |  |                          
|Net Assets Available for Settlement of Senior Notes                                    |  |                           | 99,288  |                            |   | 125,852
|                                                                                       |  |                          
|Senior Notes with outstanding principal of $1.4 billion at estimated settlement amount |  |                           | 99,288  |                            |   | 125,852
|                                                                                       |  |                           |         |                            |   |        
|Net Assets in Liquidation                                                              |  | $                         |        |                            | $ |       
|                                                                                       |  |                           |         |                            |   |        

See notes to interim condensed consolidated financial statements.



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THE FINOVA GROUP INC.

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS IN LIQUIDATION (LIQUIDATION BASIS)

(Dollars in thousands)

(Unaudited)



|                                                                            |  |                              |         |   |      |   |         |  
|--------------------------------------------------------------------------- |  | ---------------------------- | ------- | - | ---- | - | ------- | -
|                                                                            |  | Three Months Ended March 31, |        
|                                                                            |  | 2009                         |         |   | 2008 |  
|Net Assets in Liquidation, beginning of year                                |  | $                            |        |   |      | $ |        |  
|                                                                            |  |                             
|Changes in net assets in liquidation:                                       |  |                              |         |   |      |   |         |  
|Change in estimated net realizable value of assets and other liabilities    |  |                              | (77     | ) |      |   | 218     |  
|Interest earned on investment of cash reserves and other operating activity |  |                              | 183     |   |      |   | 2,238   |  
|Change in estimated costs during the liquidation period                     |  |                              | 33      |   |      |   | 1,178   |  
|Interest accruing on the Senior Notes                                       |  |                              | (26,703 | ) |      |   | (26,703 | )
|Reduction in the estimated settlement of the Senior Notes                   |  |                              | 26,564  |   |      |   | 23,069  |  
|                                                                            |  |                              |         |   |      |   |         |  
|Net Change in Net Assets in Liquidation                                     |  | $                            |        |   |      | $ |        |  
|                                                                            |  |                              |         |   |      |   |         |  
|Net Assets in Liquidation, end of period                                    |  | $                            |        |   |      | $ |        |  
|                                                                            |  |                              |         |   |      |   |         |  

See notes to interim condensed consolidated financial statements.



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THE FINOVA GROUP INC.

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31,
2009

(Dollars in thousands in tables)

(Unaudited)

A. Nature of Operations and Plan of Liquidation

The accompanying financial statements and notes hereto should be read in conjunction with the consolidated financial statements and notes thereto included in the
Companys Annual Report on Form 10-K for the year ended December 31, 2008 (the 2008 Form 10-K). Capitalized terms not defined herein are used as defined in the 2008 Form 10-K.

The notes to the financial statements relate to The FINOVA Group Inc. and its subsidiaries (collectively FINOVA or the Company), including FINOVA
Capital Corporation and its subsidiaries (FINOVA Capital). FINOVA was a financial services holding company. Through its principal operating subsidiary, FINOVA Capital, we provided a broad range of financing and capital markets products,
primarily to mid-size businesses. Throughout this document, we, us and our also refer to The FINOVA Group Inc. and its subsidiaries.

Since emergence from chapter 11 bankruptcy proceedings in August 2001, our business activities have been limited to maximizing the value of our portfolio through the orderly collection of our assets. These activities
included collection efforts pursuant to underlying contractual terms, negotiation of prepayments and sales of assets or collateral. We have substantially completed the liquidation of our portfolio and our focus has shifted to the continued wind down
of our operations and future dissolution of our entities. We are prohibited by the Indenture (the Indenture) governing our 7.5% Senior Secured Notes (the Senior Notes) from engaging in any new lending activities or other
business.

In accordance with the terms of the Indenture, we are required to use any excess cash, as defined in the Indenture, to make semi-annual interest
and principal payments on the Senior Notes. Additionally, the Indenture permits voluntary prepayments at our option, which we have previously elected to make from time to time; however, due to the uncertainty of cash requirements associated with the
wind-up of our affairs and resolution of matters related to the TLP Action, discussed below in Note G. Litigation and Claims, we are maintaining cash reserves to cover these potential and uncertain expenditures. As a result we will not
make future voluntary prepayments and we will not make the scheduled May 15, 2009 interest payment.

Because substantially all of our assets
(including cash reserves) are pledged to secure obligations under the promissory notes of FINOVA Capital issued to us in the aggregate principal amount of the Senior Notes (the Intercompany Notes), our ability to obtain additional or
alternate financing is severely restricted. As a result of this and the substantial liquidation of our portfolio, our only meaningful source of liquidity is cash reserves held by the Company.

Plan of Liquidation

On November 1, 2006, our Board of Directors
(the Board) approved the Plan of Complete Liquidation and Dissolution (the Plan of Liquidation) and the filing of a motion (the Motion) in the United States Bankruptcy Court for the District of Delaware (the
Bankruptcy Court). On December 4, 2006, the Bankruptcy Court granted our Motion and approved (i) the previously announced settlement of various litigations associated with The Thaxton Group, Inc. (the Thaxton
Settlement), (ii) the ongoing sale of our remaining assets, the orderly windup of our operations and our future dissolution, (iii) our sale of all or substantially all of our assets without stockholder approval and our future
dissolution without stockholder approval at such time as our Board deems to be appropriate and (iv) channeling to the Bankruptcy Court any claims against us that the holders of our Senior Notes or the indenture trustee for the Senior Notes may
have arising from or in any way related to our joint chapter 11 plan, the ongoing liquidation of FINOVA, the senior secured notes, or the windup of our operations.

We have continued with efforts to wind-up our affairs; however, as previously disclosed we cannot control the timing of resolving legal matters. Certain legal matters continue to take longer than anticipated to resolve, including the
Thaxton Life Partners arbitration hearing, which, as previously disclosed, has been postponed until mid 2009, and the motion regarding distributions to stockholders described below. Once the legal matters have been resolved, FINOVA believes it will
still need a short period of time to complete the final wind-up of our affairs. As a result, the reserve for estimated costs reflected in our Statement of Net Assets in Liquidation currently assumes a liquidation period through August of 2009. There
can be no



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assurance we will complete our liquidation in this time period, and the resolution of the various legal matters may
extend for a longer period of time. We are concerned about the continued delays in the legal process, particularly in regards to the motion regarding distributions to stockholders and how such delays continue to deplete assets available to settle
our liabilities. We have evaluated and continue to consider alternatives to complete the wind-up process, including transferring to a liquidating trust any assets not sold or distributed (subject to outstanding liabilities), depending on the
progress of the outstanding legal matters. We will continue to evaluate our progress in resolving the outstanding legal matters on at least a quarterly basis and re-evaluate our reserve for estimated costs. Refer below to Note G. Litigation
and Claims for the status of our outstanding legal matters.

We will continue to operate as a public company during the liquidation under a
Management Services Agreement with Leucadia National Corporation (Leucadia) that expires in 2011. Pursuant to that agreement, Leucadia has designated its employees to act as Chairman of the Board (Ian M. Cumming), President (Joseph S.
Steinberg) and Chief Executive Officer (Thomas E. Mara).

B. Significant Accounting Policies

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires us to use estimates and assumptions that affect reported
amounts of assets and liabilities. These estimates are subject to known and unknown risks, uncertainties and other factors that could materially impact the amounts reported and disclosed in the financial statements. Significant estimates include
anticipated amounts and timing of future cash flows used in the calculation of net realizable value, reserve for future costs and settlement amounts. Actual results could differ from those estimated.

Interim Reporting

The interim consolidated financial
statements have been prepared in accordance with U.S. generally accepted accounting principles. The interim consolidated financial information is unaudited. In the opinion of management, all adjustments consisting of normal recurring items necessary
to present fairly our net assets in liquidation as of March 31, 2009 and the changes in net assets presented herein have been included in our consolidated financial statements.

For a complete listing of our significant accounting policies, see Note B. Significant Accounting Policies in our 2008 Form 10-K. The policies related to the liquidation basis of accounting were the only
policies presented herein. With the adoption of the liquidation basis of accounting, all anticipated improvements or deterioration in the portfolio are fully reflected in our financial statements as facts and assumptions change.

Liquidation Basis of Accounting

As a result of the approval
of our Plan of Liquidation by the Bankruptcy Court, we took steps to initiate our complete liquidation and as such, the information provided in this Report on Form 10-Q reflects our adoption of the liquidation basis of accounting effective the close
of business on December 4, 2006 in accordance with accounting principles generally accepted in the United States. A Statement of Net Assets in Liquidation and a Statement of Changes in Net Assets in Liquidation are the principal financial
statements presented under the liquidation basis of accounting. Under the liquidation basis of accounting, assets are stated at their estimated net realizable value, which is the non-discounted amount of cash, or its equivalent, into which an asset
is expected to be converted in the due course of business less direct costs, while liabilities are reported at their estimated net settlement amount, which is the non-discounted amounts of cash, or its equivalent, expected to be paid to liquidate an
obligation in the due course of business, including direct costs. Additionally, under the liquidation basis of accounting, we are required to establish a reserve for all future estimated general and administrative expenses and other costs expected
to be incurred during the liquidation (exclusive of interest expense). These estimates will be periodically reviewed and adjusted as appropriate. There can be no assurance that these estimated values will be realized. Such amounts should not be
taken as an indication of the timing or amount of future distributions or our actual dissolution. The valuation of assets at their net realizable value and liabilities at their anticipated settlement amount represent estimates, based on present
facts and circumstances, of the net realizable value of the assets and the costs associated with carrying out the Plan of Liquidation based on the assumptions set forth below. The actual values and costs associated with carrying out the Plan of
Liquidation are expected to differ from amounts reflected in the accompanying financial statements because of the plans inherent uncertainty. These differences may be material. In particular, the estimates of our costs will vary with the
length of time necessary to complete the Plan of Liquidation. Accordingly, it is not possible to predict with certainty the timing or aggregate amount which will ultimately be distributed to note holders and no assurance can be given that the
distributions will equal or exceed the estimate presented in the accompanying Statements of Net Assets in Liquidation or the price at which our Senior Notes have traded or are expected to trade in the future.



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The following are the significant assumptions utilized by management in assessing the value of our liquidating portfolio
and the expected settlement amount of liabilities included in the Statements of Net Assets in Liquidation at March 31, 2009 and December 31, 2008.

Liquidating Portfolio.The remaining liquidating portfolio is primarily comprised of judgments and claims against former customers and non-marketable private equity and other securities. All assets were adjusted to their estimated
net realizable values, which represented all future undiscounted cash flows expected to be collected from each of these transactions including sales and settlement proceeds, principal collections, scheduled rental payments and interest. Cash flow
estimates for these assets are based on current information obtained from trustees and others, collection efforts, customer collateral and the financial condition of these former customers. Certain investments are reported at their fair value, based
on published information or quotes by registered securities brokers. Changes in facts and assumptions have resulted in, and may in the future result in, significant positive or negative changes to estimated cash flows and therefore, net realizable
values.

Reserve for Estimated Costs during the Liquidation Period. Under the liquidation basis of accounting, we are required to estimate and
accrue for costs associated with implementing and completing the Plan of Liquidation. The reserve for estimated costs includes four primary areas of accruals including people costs (payroll and benefits), Leucadia management fees, professional
services and litigation costs and corporate expenses (insurance, directors fees and entity related expenses). These amounts can vary significantly due to, among other things, the timing of asset sales, the timing and amounts associated with
discharging known and contingent liabilities and claims, the costs associated with cessation of our operations including an estimate of costs subsequent to that date (which would include reserve contingencies for the appropriate statutory periods)
and the costs of retaining knowledgeable personnel and others to oversee the liquidation. As a result, we have accrued the projected costs including corporate overhead and specific liquidation costs of performance bonuses, professional fees and
various other wind-up costs expected to be incurred during the projected period to complete the liquidation and dissolution. These expense accruals will be periodically reviewed for adequacy and adjusted from time to time as projections and
assumptions change. Changes to the accruals will be recorded as adjustments to net assets in liquidation in future periods.

C. Changes in Net Assets in
Liquidation

During the three months ended March 31, 2009, the estimated net realizable value of our assets and liabilities decreased a net $0.1
million; while during the same period of 2008, the estimated net realizable value increased $0.2 million. The decrease during 2009 was primarily due to a slightly lower realization from certain customer claims and judgments than previously
estimated, while the increase during 2008 was primarily attributed to higher than previously anticipated recoveries of cash amounts posted to secure potential obligations, partially offset by a decline in the value of certain cash investments.
Additionally, during the three months ended March 31, 2009 and 2008, we accrued $26.7 million of additional interest on the Senior Notes and earned interest income on cash investments and other operating activity of $0.2 million and $2.2
million, respectively. All cash received on the portfolio is applied against its estimated net realizable value, which took into consideration all expected interest and rental payments. Any cash received in excess of an individual assets
estimated net realizable value is shown as a change in net assets in the period of collection.

The net realizable value of our assets does not take into
consideration all future interest to be earned on cash and cash equivalents. Interest earned on the investment of cash reserves is shown separately as a change in net assets. As of March 31, 2009, our short-term investments are primarily
comprised of lower risk money markets, including money markets backed by U.S. Treasuries and other government sponsored securities. The aggregate yield we are currently receiving on our cash investments is not sufficient to fully offset the costs of
the liquidation process.



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Under the liquidation basis of accounting, we were also required to establish and maintain a reserve for all future
general and administrative expenses and other costs expected to be incurred during the liquidation (exclusive of interest expense). The following is a summary of and changes to the reserve for estimated costs for the three months ended
March 31, 2009:



|                                                                |  |                  |       |                            |   |        |               |  |   |      
|--------------------------------------------------------------- |  | ---------------- | ----- | -------------------------- | - | ------ | ------------- |  | - | -----
|                                                                |  | December 31,2008 |       | NetAdjustmentsand Payments |   |        | March 31,2009
|People costs (payroll and benefits)                             |  | $                | 1,338 |                            | $ | (554   | )             |  | $ | 784  
|Leucadia management fees                                        |  |                  | 4,000 |                            |   | (2,000 | )             |  |   | 2,000
|Professional services and litigation costs                      |  |                  | 2,459 |                            |   | (564   | )             |  |   | 1,895
|General corporate expenses                                      |  |                  | 1,109 |                            |   | (223   | )             |  |   | 886  
|                                                                |  |                  |       |                            |   |        |               |  |   |      
|Total reserve for estimated costs during the liquidation period |  | $                | 8,906 |                            | $ | (3,341 | )             |  | $ | 5,565
|                                                                |  |                  |       |                            |   |        |               |  |   |      

During the three months ended March 31, 2009, the reserve declined to $5.6 million due to the payment of
expenses ($3.3 million). During the three months ended March 31, 2008, the reserve for estimated costs declined by $6.4 million due to the payment of expenses ($5.2 million) and a $1.2 million reduction due to certain actual expenses being
lower than previously estimated.

We have continued with efforts to wind-up our affairs; however, as previously disclosed we cannot control the timing of
resolving legal matters. Certain legal matters continue to take longer than anticipated to resolve, including the Thaxton Life Partners arbitration hearing, which has been postponed until mid 2009, and the motion regarding distributions to
stockholders described below. Once the legal matters have been resolved, FINOVA believes it will still need a short period of time to complete the final wind-up of our affairs. As a result, the reserve for estimated costs reflected in our Statement
of Net Assets in Liquidation currently assumes a liquidation period through August of 2009. There can be no assurance we will complete our liquidation in this time period, and the resolution of the various legal matters may extend for a longer
period of time. We are concerned about the continued delays in the legal process, particularly in regards to the motion regarding distributions to stockholders and how such delays continue to deplete assets available to settle our liabilities. We
have evaluated and continue to consider alternatives to complete the wind-up process, including transferring to a liquidating trust any assets not sold or distributed (subject to outstanding liabilities), depending on the progress of the outstanding
legal matters. We will continue to evaluate our progress in resolving the outstanding legal matters on at least a quarterly basis and re-evaluate our reserve for estimated costs. Refer below to Note G. Litigation and Claims for the
status of our outstanding legal matters.

Due to the fact that we do not have sufficient assets to fully satisfy all obligations to our creditors, any
change to the estimated net realizable value of our assets and liabilities results in a corresponding adjustment to the estimated settlement amount of the Senior Notes. During the three months ended March 31, 2009, the estimated settlement
amount of the Senior Notes (principal only) was reduced by $26.6 million to a balance of $99.3 million; however, we currently estimate the Senior Note holders will receive total liquidation distributions (principal and interest) of approximately
$139.6 million, which is a $0.1 million increase over our 2008 year-end estimate.

D. Liquidating Portfolio

Our liquidating portfolio is recorded at its estimated net realizable value, which incorporates all future cash flows, including earnings expected to be collected.

The following table presents the activity in our liquidating portfolio for the three months ended March 31, 2009:



|                                           |  |   |      |  
|------------------------------------------ |  | - | ---- | -
|Liquidating Portfolio at December 31, 2008 |  | $ | 505  |  
|Cash activity                              |  |   | (216 | )
|Non-cash activity                          |  |   | (27  | )
|                                           |  |   |      |  
|Liquidating Portfolio at March 31, 2009    |  | $ | 262  |  
|                                           |  |   |      |  

Our liquidating portfolio declined to $0.3 million at March 31, 2009. Cash activity for 2009 primarily
represented collections and proceeds received on judgments and claims against former customers, while the non-cash activity primarily represented a decrease in the estimated net realizable value of certain assets due to slightly lower than
previously anticipated recovery of claims against former customers.



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As of March 31, 2009, the remaining portfolio value is primarily comprised of a number of judgments and claims
against former customers (net realizable value of $0.3 million) and a few non-marketable private equity and other securities. In the majority of these instances, we did not attribute any net realizable value to these assets due to our inability to
predict the collection of any cash flows from the transactions with even a remote level of confidence. Most of these transactions were previously included in due diligence materials in an attempt to sell the assets, but were excluded on multiple
occasions by prospective buyers because of costs of collection and potential liability concerns of the buyers. Prospective buyers that specialize in these types of residual assets and claims performed due diligence, but were not interested in making
an offer. We continue to monitor these accounts for changes in facts and circumstances that would allow us to attribute value to these assets or events that would resolve their ultimate disposition. As a result, there is the possibility that some
net realizable value will be attributed to these assets in the future. An increase in the estimated net realizable value of these assets, if any, will be reflected as a change in net assets in liquidation in future filings. Additionally, we continue
to occasionally receive proceeds from trustees and liquidators for assets that in certain cases were written off years ago. These cash flows are typically immaterial and are reflected as a change in net assets in liquidation as they are received. We
expect certain of these assets will outlast the Company. In connection with or prior to the final dissolution of our entities, we anticipate assigning or transferring the rights to collection of these assets to a trustee or receiver for the benefit
of the Senior Note holders.

E. Debt

A summary of our
total debt outstanding on a liquidation basis was as follows:



|                                                                |  |               |            |   |                  |   |            |  
|--------------------------------------------------------------- |  | ------------- | ---------- | - | ---------------- | - | ---------- | -
|                                                                |  | March 31,2009 |            |   | December 31,2008 |  
|Senior Notes:                                                   |  |               |            |   |                  |   |            |  
|Principal                                                       |  | $             | 1,424,166  |   |                  | $ | 1,424,166  |  
|Principal of Senior Notes estimated to not be settled or repaid |  |               | (1,324,878 | ) |                  |   | (1,298,314 | )
|                                                                |  |               |            |   |                  |   |            |  
|Senior Notes                                                    |  | $             | 99,288     |   |                  | $ | 125,852    |  
|                                                                |  |               |            |   |                  |   |            |  

During the first quarter of 2009, we made no principal payments on the Senior Notes. Cumulative prepayments
through March 31, 2009 totaled $1.54 billion, which reduced the outstanding principal to $1.4 billion and represented approximately 52% of the principal being repaid. Based on the valuation of our assets at their estimated net realizable value
and liabilities at estimated settlement amount, we currently estimate the Senior Note holders will receive additional liquidation distributions (principal and interest) of approximately $139.6 million, which is a $0.1 million increase over our 2008
year-end estimate, but considerably less than the total principal and interest due of approximately $1.5 billion. The estimated settlement amount was determined solely based on the net assets available for settlement of the Senior Notes and is
subject to change due to changes in the estimated net realizable value of our net assets. We clearly do not have sufficient assets to fully repay the Senior Note obligation upon maturity in November 2009.

While the Senior Notes have a first priority security interest in substantially all of our remaining assets, the Indenture requires us to first use any cash and cash
equivalents to pay or fund operating expenses, taxes and reasonable reserves for commitments and general corporate purposes. In accordance with the terms of the Indenture, we are required to use any excess cash, as defined in the Indenture, to make
semi-annual interest and principal payments on the Senior Notes. Additionally, the Indenture permits voluntary prepayments at our option, which we have previously elected to make from time to time; however, due to the uncertainty of cash
requirements associated with the wind-up of our affairs and resolution of matters related to the TLP Action, discussed below in Note G. Litigation and Claims, we are maintaining cash reserves to cover these potential and uncertain
expenditures. As a result, we will not make future voluntary prepayments and we will not make the scheduled May 15, 2009 interest payment. The remaining unrestricted cash will be distributed in conjunction with the wind-up of our affairs and
future dissolution, which is currently expected to occur by the end of August 2009, although there can be no assurance that we will be successful in meeting that schedule. Failure to make the May 15, 2009 interest payment is not an event of
default under the Indenture, which requires the Company to fail to pay two consecutive interest payments before an event of default occurs.

The timing and
amount of distributions to Senior Note holders will primarily depend on the resolution of legal matters, the extent to which reserves for current or future liabilities are required, the length of time required to settle all of our matters and to a
lesser extent, the timing and amounts we receive for our remaining assets. Refer below to Note G. Litigation and Claims for the status of our outstanding legal matters and a discussion of the equity committees appeals of the
Bankruptcy Courts and Delaware District Courts orders.



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Stockholders should not expect any payments or distributions. The Indenture contemplates that as principal payments are
made on the Senior Notes, our stockholders may receive a distribution equal to 5.263% (i.e., 5%/95%) of each principal prepayment. Ninety-five percent (95%) of the remaining available cash after establishment of cash reserves as defined in the
Indenture may be used to make prepayments of principal on the Senior Notes and five percent (5%) is identified for distributions to and/or repurchases of stock from common stockholders. However, the Indenture prohibits us from making
distributions to and/or repurchases from stockholders if the payments would render the Company insolvent, would be a fraudulent conveyance or would not be permitted to be made under applicable law. Any such distribution and/or repurchase would be
considered an impermissible restricted payment under the Indenture.

In conjunction with the prepayments of the Senior Notes noted above, we have retained
a total of $81.2 million as of March 31, 2009. Retained amounts have been segregated and reflected as restricted cash in our financial statements, pending their final disposition. We anticipate that the retained amounts will eventually be paid
to our creditors, not our stockholders. If the funds were to be paid to our stockholders, affiliates of Berkadia (jointly owned by Leucadia and Berkshire Hathaway), which owns 50% of our common stock, would receive half of the retained
amounts. Berkadia has advised us that it does not believe that stockholders are entitled to the retained amounts since we cannot fully satisfy our creditor obligations.

As previously reported, in June 2007 the Bankruptcy Court determined that (1) we no longer need to direct funds into a restricted account, and (2) we may use those funds for general corporate purposes. On
August 26, 2008, the Delaware District Court upheld the Bankruptcy Court ruling, but on September 23, 2008, the equity committee appealed the Delaware District Courts ruling to the United Stated Court of Appeals for the Third
Circuit, which has granted the equity committee a stay pending appeal. For a further discussion of the appeal and its status, see Note G. Litigation and Claims.

F. Income Taxes

Our federal net operating loss carryforwards of $1.7 billion have remained relatively unchanged
since year end. No income tax expense or benefit was recorded during the three months ended March 31, 2009 and 2008. Any income or loss has been entirely offset by a decrease or increase in valuation allowances against deferred tax assets,
which were previously established due to concerns regarding our ability to utilize income tax benefits generated from losses in prior periods. We do not expect to be able to utilize all the deferred tax assets due to uncertainty about the amount of
future earnings, a variety of loss or other tax attribute carryover limitations in the various jurisdictions in which we file tax returns and uncertainty regarding the timing of the reversal of deferred tax liabilities.

G. Litigation and Claims

Legal Proceedings

We are party either as plaintiff or defendant to various actions, proceedings and pending claims, including legal actions, some of which involve claims for
compensatory, punitive or other damages in significant amounts. Litigation often results from our attempts to enforce our lending agreements against borrowers and other parties to those transactions. Litigation is subject to many uncertainties. It
is possible that some of the legal actions, proceedings or claims could be decided against us. Other than the matters described below, we believe that any resulting liability from our legal proceedings should not materially affect our net assets in
liquidation or cash flows. The following matters could have a material adverse impact on our net assets in liquidation or cash flows.

Historically, it was
our policy to accrue for loss contingencies, including litigation, only when the losses were probable and estimable. The determination of when losses became probable and estimable was inherently subjective and required significant judgment. Under
the liquidation basis of accounting, liabilities for loss contingencies and claims are reported at their estimated net settlement amount, which is the non-discounted amount of cash expected to be paid to liquidate or settle an obligation in the due
course of business.

If any legal proceedings were to result in a significant adverse judgment against us, it is possible that we would not be able to
satisfy that liability due to our financial condition. As previously noted, due to our financial condition, we do not expect that we can satisfy all of our secured debt obligations at maturity.



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Thaxton Life Partners Litigation

As previously disclosed, on September 29, 2006, a group of noteholders of Thaxton Life Partners, Inc. (TLP) filed suit against the Company and FINOVA Capital (the TLP Action). The TLP
Action is unrelated to the previously disclosed Thaxton Group Inc. litigation that was settled in 2007. The Company and FINOVA Capital were served with the TLP Action in February of 2007. The TLP Action purports to be a class action filed on behalf
of approximately 150 TLP note holders with claims related to approximately $20 million in TLP notes. The TLP Action alleges that, in connection with TLPs sale of its notes, the Company, FINOVA Capital, and several other defendants participated
in a civil conspiracy, violated the South Carolina Unfair Trade Practices Act, violated the civil RICO statute, and were unjustly enriched. In its various counts, the TLP Action seeks actual, treble, and/or punitive damages.

The TLP Action was filed in the South Carolina Court of Common Pleas of Lancaster County, Sixth Judicial Circuit, and was removed on February 6, 2007 to the United
States District Court for the District of South Carolina (the South Carolina District Court). We believe that all claims against both us and FINOVA Capital are without merit, and that, under the terms of the TLP notes, the TLP Action
must move forward in arbitration. Upon motion by the Company and FINOVA Capital to the South Carolina District Court seeking an order compelling such arbitration, the South Carolina District Court granted the relief sought and entered an order
dismissing the action on May 30, 2007. On June 19, 2007, the TLP plaintiffs appealed such order to the United States Court of Appeals for the Fourth Circuit (the Fourth Circuit). Further, on June 29, 2007, the TLP
plaintiffs filed an arbitration demand with the American Arbitration Association. On August 16, 2007, the Company and FINOVA Capital filed a response to the arbitration demand denying any liability. On December 20, 2007, the TLP
plaintiffs appeal was denied by the Fourth Circuit. On January 23, 2008, a petition for rehearing by the TLP plaintiffs was also denied by the Fourth Circuit. The Company and FINOVA Capital intend to vigorously defend against the TLP note
holders claims asserted against the Company and FINOVA Capital in the pending arbitration.

A hearing on the merits of the TLP Action was originally
scheduled to be heard in September 2008, but was rescheduled for mid-January 2009 due to one of the members of the arbitration panel having a scheduling conflict. The mid-January 2009 hearing was postponed due to the death of one of the three
arbitrators scheduled to hear the matter. The parties have agreed upon a new third arbitrator and a hearing on the merits of the TLP Action is expected to be heard in mid 2009.

Motion Regarding Distributions to Stockholders

As discussed more fully in Note E. Debt, the
Indenture contemplates that as principal payments are made on the Senior Notes, our stockholders may receive a distribution equal to 5.263% of each principal prepayment. However, the Indenture prohibits distribution of those amounts due to our
financial condition. Those amounts have been held in a restricted account, and totaled $81.2 million as of March 31, 2009. Because we will not be able to repay the Senior Notes in full, on April 1, 2005, we filed a motion in the Bankruptcy
Court seeking an order (1) to cease directing funds into the restricted account and (2) to allow us to use those funds for general corporate purposes.

On June 26, 2007, the Bankruptcy Court issued a final order (the Final Clarification Order) finding, among other things, that FINOVA is presently and will be forever insolvent, and lifted the requirement that FINOVA
segregate the funds into a restricted account enabling FINOVA to use these funds for general corporate purposes. The equity committee subsequently filed an appeal (on July 6, 2007) of the Final Clarification Order to the United States District
Court for the District of Delaware (the Delaware District Court) and a motion with the Delaware District Court requesting a stay (on August 31, 2007) pending final resolution of any appeal. On October 31, 2007, the Delaware
District Court granted a stay pending appeal of the Bankruptcy Courts Final Clarification Order.

FINOVA has been required to pay fees and expenses
incurred by the equity committees professionals up to an aggregate limit of $473,751. On January 10, 2008, the Bankruptcy Court ordered that the equity committee shall not submit any further motions or requests for fees and expenses
unless they prevailed in the appeal of the Final Clarification Order.

On August 26, 2008, the Delaware District Court issued a memorandum opinion and
order (the August Order) affirming all six of the Bankruptcy Courts orders and denied the equity committees motion to strike the Companys cross-appeal. The ruling by the Delaware District Court upheld the Bankruptcy
Courts Final Clarification Order and lifted the requirement that FINOVA segregate funds into a restricted account, thereby enabling FINOVA to use those funds for general corporate purposes. The ruling by the Delaware District Court also upheld
the Bankruptcy Courts orders regarding the formation of the equity committee and the multiple fee cap orders, which, as previously disclosed, were being contested by FINOVA.



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The equity committee subsequently filed a motion requesting a stay in the distribution of funds held in the restricted
account pending appeal of the Delaware District Courts August Order. On September 22, 2008, the Delaware District Court denied the equity committees motion to stay the Delaware District Courts August Order.

On September 23, 2008, the equity committee filed a notice of appeal to the United States Court of Appeals for the Third Circuit (the Third Circuit)
with respect to those portions of the August Order that upheld the lifting of the requirement that FINOVA segregate funds into a restricted account. On October 10, 2008, the equity committee filed a motion with the Third Circuit requesting a
stay in the distribution of funds held in the restricted account pending the equity committees appeal to the Third Circuit. On November 4, 2008, the Third Circuit granted the equity committees motion for a stay pending appeal. Based
on a briefing and scheduling order issued by the Third Circuit, all briefs are to be completed by the end of May 2009 and we expect that a hearing, if the Third Circuit chooses to hear oral arguments, will not occur before late third quarter of
2009.



|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

The following section should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2008 (the 2008 Form 10-K) and the Special Note Regarding Forward-Looking
Statements included herein. Capitalized terms not defined herein are used as defined in the 2008 Form 10-K. The following discussion relates to The FINOVA Group Inc. and its subsidiaries (collectively FINOVA or the Company),
including its principal operating subsidiary, FINOVA Capital Corporation and its subsidiaries (FINOVA Capital).

OVERVIEW

Plan of Liquidation.On November 1, 2006, our Board of Directors (the Board) approved the Plan of Complete Liquidation and Dissolution (the
Plan of Liquidation) and the filing of a motion (the Motion) in the United States Bankruptcy Court for the District of Delaware (the Bankruptcy Court), which was approved by the Bankruptcy Court on
December 4, 2006. As a result of these approvals, we took steps to initiate our complete liquidation and as such, the information provided in this Report on Form 10-Q reflects our adoption of the liquidation basis of accounting effective the
close of business on December 4, 2006 in accordance with accounting principles generally accepted in the United States.

As of March 31, 2009, we
had substantially completed the liquidation of our asset portfolio. Our attention is now focused on the wind down of our operations, resolution of legal matters and the future dissolution of our entities. We are in the process of withdrawing our
authority to conduct business in the states that we no longer have active assets or legal requirements that necessitate our continued authorization to conduct business. As of March 31, 2009, we have completed the withdrawal process for 44
states, while others are pending. The timing and amount of distributions to Senior Note holders will primarily depend on the resolution of legal matters, the extent to which reserves for current or future liabilities are required, the length of time
required to settle all our matters and, to a lesser extent, the timing and amounts we receive for our remaining assets.

We have continued with efforts to
wind-up our affairs; however, as previously disclosed we cannot control the timing of resolving legal matters. Certain legal matters continue to take longer than anticipated to resolve, including the Thaxton Life Partners arbitration hearing, which
has been postponed until mid 2009, and the motion regarding distributions to stockholders described below. Once the legal matters have been resolved, FINOVA believes it will still need a short period of time to complete the final wind-up of our
affairs. As a result, the reserve for estimated costs reflected in our Statement of Net Assets in Liquidation currently assumes a liquidation period through August of 2009. There can be no assurance we will complete our liquidation in this time
period, and the resolution of the various legal matters may extend for a longer period of time. We are concerned about the continued delays in the legal process, particularly in regards to the motion regarding distributions to stockholders and how
such delays continue to deplete assets available to settle our liabilities. We have evaluated and continue to consider alternatives to complete the wind-up process, including transferring to a liquidating trust any assets not sold or distributed
(subject to outstanding liabilities), depending on the progress of the outstanding legal matters. We will continue to evaluate our progress in resolving the outstanding legal matters on at least a quarterly basis and re-evaluate our reserve for
estimated costs. Refer above to Note G. Litigation and Claims for the status of our outstanding legal matters.

We continue to retain cash
reserves to fund our expenses, including the costs associated with the wind-up of our affairs and matters related to the TLP Action, which will limit our ability to make future voluntary principal prepayments and interest payments. The Company will
not make the scheduled May 15, 2009 interest payment.



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Forever Insolvent. As of March 31, 2009, we have repaid $1.54 billion or approximately 52% of the principal
on the Senior Notes. Based on the valuation of our assets at their estimated net realizable value and liabilities at estimated settlement amount, we currently estimate the Senior Note holders will receive additional liquidation distributions
(principal and interest) of approximately $139.6 million, which is a $0.1 million increase over our 2008 year-end estimate, but considerably less than the total principal and interest due of approximately $1.5 billion. We clearly do not have
sufficient assets to fully repay the Senior Note obligation. On June 26, 2007, the Bankruptcy Court issued a final order finding, among other things, that FINOVA is presently and will be forever insolvent.

No Stockholder Payments Anticipated.While the Indenture contemplated we would make payments to our stockholders as the Senior Notes were repaid, we have not made
those payments. Distributions to stockholders are prohibited due to our financial condition. Based on our liquidation basis financial statements, we will not be able to repay approximately $1.3 billion of the Senior Notes. As a result, stockholders
should not expect any payments or return on their common stock. Funds related to the restricted distributions have been held in a segregated account, pending their final disposition. We anticipate that those funds will eventually be paid to our
creditors, not to our stockholders. If the funds were to be paid to our stockholders, affiliates of Berkadia (which are owned by Berkshire Hathaway and Leucadia), as owner of 50% of our stock, would receive half of those payments.

As discussed in Note G. Litigation and Claims, in June 2007, the Bankruptcy Court determined that (1) we no longer need to direct funds into a
restricted account, and (2) we may use those funds for general corporate purposes. On August 26, 2008, the Delaware District Court upheld the Bankruptcy Court ruling, but on September 23, 2008, the equity committee appealed the
Delaware District Courts ruling to the United Stated Court of Appeals for the Third Circuit, and the Third Circuit has granted the equity committees motion for stay pending appeal.

No Restructuring Plan Contemplated.On numerous occasions, we have been asked whether there is some plan to restructure the Company so as to be able to realize
value from our net operating loss carryforwards (NOL). We are not formulating a restructuring plan. However, as we have noted for some time, the Board remains willing to consider legitimate proposals presented by note holders or others.
Multiple groups have made proposals or presented us with concepts designed to save the NOLs. In each and every instance to date, the proposals and concepts were determined to not be viable under the applicable tax regulations and/or did not make
economic sense.

Many obstacles exist to creation of a viable restructuring plan. A restructuring presumes a sensible business plan emerging from that
process. In light of our dwindling asset base, lack of retained business knowledge and the competitive environment, we believe it would be difficult, if not futile, in these circumstances to develop a business model that can produce returns to the
creditors and/or new investors greater than that expected from the present course. Absent that, or a substantial new investment in FINOVA, we believe it would be difficult to obtain the requisite approval to restructure the present debt obligations.
The task has become more difficult due to the substantial liquidation of our portfolio, continuation of the wind-up process and current general economic conditions. We caution investors to carefully evaluate applicable tax regulations, which
restrict the ability to transfer or use NOLs in a variety of circumstances. As previously disclosed, our financial statements do not anticipate using the NOLs. Upon final dissolution of our entities, the NOLs will be extinguished.

HIGH INVESTMENT RISK OF SECURITIES. As previously stated, we will not be able to fully repay the Senior Notes or to make any distributions to our stockholders, absent
a court order in connection with the appeal referred to above. Consequently, investing in our Senior Notes and common stock involves a high level of risk.

CRITICAL ACCOUNTING POLICIES

Our consolidated financial statements continue to be prepared in accordance with U.S. generally accepted
accounting principles. The preparation of these financial statements requires us to use estimates and assumptions that affect reported amounts of assets and liabilities. These estimates are subject to known and unknown risks, uncertainties and other
factors that could materially impact the amounts reported and disclosed in the financial statements. See Item 1A. Risk Factors and Special Note Regarding Forward-Looking Statements in our 2008 Form 10-K for more
information on these risks and uncertainties. We believe the following to be among the most critical judgment areas in the application of our accounting policies.



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Liquidation Basis of Accounting

As a result of the approval of our Plan of Liquidation by the Bankruptcy Court, we took steps to initiate our complete liquidation and as such, the information provided in this Report on Form 10-Q reflects our
adoption of the liquidation basis of accounting effective the close of business on December 4, 2006 in accordance with accounting principles generally accepted in the United States. A Statement of Net Assets in Liquidation and a Statement of
Changes in Net Assets in Liquidation are the principal financial statements presented under the liquidation basis of accounting. Under the liquidation basis of accounting, assets are stated at their estimated net realizable value, which is the
non-discounted amount of cash, or its equivalent, into which an asset is expected to be converted in the due course of business less direct costs, while liabilities are reported at their estimated net settlement amount, which is the non-discounted
amounts of cash, or its equivalent, expected to be paid to liquidate an obligation in the due course of business, including direct costs. Additionally, under the liquidation basis of accounting, we are required to establish a reserve for all future
estimated general and administrative expenses and other costs expected to be incurred during the liquidation (exclusive of interest expense). These estimates will be periodically reviewed and adjusted as appropriate. There can be no assurance that
these estimated values will be realized. Such amounts should not be taken as an indication of the timing or amount of future distributions or our actual dissolution. The valuation of assets at their net realizable value and liabilities at their
anticipated settlement amount represent estimates, based on present facts and circumstances, of the net realizable value of the assets and the costs associated with carrying out the Plan of Liquidation based on the assumptions set forth below. The
actual values and costs associated with carrying out the Plan of Liquidation are expected to differ from amounts reflected in the accompanying financial statements because of the plans inherent uncertainty. These differences may be material.
In particular, the estimates of our costs will vary with the length of time necessary to complete the Plan of Liquidation. Accordingly, it is not possible to predict with certainty the timing or aggregate amount which will ultimately be distributed
to note holders and no assurance can be given that the distributions will equal or exceed the estimate presented in the accompanying Statements of Net Assets in Liquidation or the price at which our Senior Notes have traded or are expected to trade
in the future.

The following are the significant assumptions utilized by management in assessing the value of our liquidating portfolio and the expected
settlement amount of liabilities included in the Statements of Net Assets in Liquidation at March 31, 2009 and December 31, 2008.

Liquidating
Portfolio.The remaining liquidating portfolio is primarily comprised of judgments and claims against former customers and non-marketable private equity and other securities. All assets were adjusted to their estimated net realizable values,
which represented all future undiscounted cash flows expected to be collected from each of these transactions including sales and settlement proceeds, principal collections, scheduled rental payments and interest. Cash flow estimates for these
assets are based on current information obtained from trustees and others, collection efforts, customer collateral and the financial condition of these former customers. Certain investments are reported at their fair value, based on published
information or quotes by registered securities brokers. Changes in facts and assumptions have resulted in, and may in the future result in, significant positive or negative changes to estimated cash flows and therefore, net realizable values.

Reserve for Estimated Costs during the Liquidation Period. Under the liquidation basis of accounting, we are required to estimate and accrue for
costs associated with implementing and completing the Plan of Liquidation. The reserve for estimated costs includes four primary areas of accruals including people costs (payroll and benefits), Leucadia management fees, professional services and
litigation costs and corporate expenses (insurance, directors fees and entity related expenses). These amounts can vary significantly due to, among other things, the timing of asset sales, the timing and amounts associated with discharging
known and contingent liabilities and claims, the costs associated with cessation of our operations including an estimate of costs subsequent to that date (which would include reserve contingencies for the appropriate statutory periods) and the costs
of retaining knowledgeable personnel and others to oversee the liquidation. As a result, we have accrued the projected costs including corporate overhead and specific liquidation costs of performance bonuses, professional fees and various other
wind-up costs expected to be incurred during the projected period to complete the liquidation and dissolution. These expense accruals will be periodically reviewed for adequacy and adjusted from time to time as projections and assumptions change.
Changes to the accruals will be recorded as adjustments to net assets in liquidation in future periods.

With the adoption of the liquidation basis of
accounting, all anticipated improvements or deterioration in the portfolio are fully reflected in our financial statements as facts and assumptions change.



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CHANGES IN NET ASSETS IN LIQUIDATION

The following table summarizes the changes in net assets in liquidation for the three months ended March 31, 2009 and 2008 (dollars in thousands):



|                                                                            |  |      |         |   |      |   |         |  
|--------------------------------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------- | -
|                                                                            |  | 2009 |         |   | 2008 |  
|Net Assets in Liquidation, beginning of year                                |  | $    |        |   |      | $ |        |  
|                                                                            |  |     
|Changes in net assets in liquidation:                                       |  |      |         |   |      |   |         |  
|Change in estimated net realizable value of assets and other liabilities    |  |      | (77     | ) |      |   | 218     |  
|Interest earned on investment of cash reserves and other operating activity |  |      | 183     |   |      |   | 2,238   |  
|Change in estimated costs during the liquidation period                     |  |      | 33      |   |      |   | 1,178   |  
|Interest accruing on the Senior Notes                                       |  |      | (26,703 | ) |      |   | (26,703 | )
|Reduction in the estimated settlement of the Senior Notes                   |  |      | 26,564  |   |      |   | 23,069  |  
|                                                                            |  |      |         |   |      |   |         |  
|Net Change in Net Assets in Liquidation                                     |  | $    |        |   |      | $ |        |  
|                                                                            |  |      |         |   |      |   |         |  
|Net Assets in Liquidation, end of period                                    |  | $    |        |   |      | $ |        |  
|                                                                            |  |      |         |   |      |   |         |  

Changes in Net Assets in Liquidation for the three months ended March 31, 2009 and 2008

During the three months ended March 31, 2009, the estimated net realizable value of our assets and liabilities decreased a net $0.1 million; while during the same
period of 2008, the estimated net realizable value increased $0.2 million. The decrease during 2009 was primarily due to a slightly lower realization from certain customer claims and judgments than previously estimated, while the increase during
2008 was primarily attributed to higher than previously anticipated recoveries of cash amounts posted to secure potential obligations, partially offset by a decline in the value of certain cash investments.

Additionally, during the three months ended March 31, 2009 and 2008, we accrued $26.7 million of additional interest on the Senior Notes and earned interest income
on cash investments and other operating activity of $0.2 million and $2.2 million, respectively. All cash received on the portfolio is applied against its estimated net realizable value, which took into consideration all expected interest and rental
payments. Any cash received in excess of an individual assets estimated net realizable value is shown as a change in net assets in the period of collection.

The net realizable value of our assets does not take into consideration all future interest to be earned on cash and cash equivalents. Interest earned on the investment of cash reserves is shown separately as a change in net assets. As of
March 31, 2009, our short-term investments are primarily comprised of lower risk money markets, including money markets backed by U.S. Treasuries and other government sponsored securities. The aggregate yield we are currently receiving on our
cash investments is not sufficient to fully offset the costs of the liquidation process.

As previously discussed, we established a reserve for estimated
costs during the liquidation period and all future expenditures for operating expenses are charged directly against the reserve. During the three months ended March 31, 2009, the reserve declined to $5.6 million due to the payment of expenses
($3.3 million). During the three months ended March 31, 2008, the reserve for estimated costs declined by $6.4 million due to the payment of expenses ($5.2 million) and a $1.2 million reduction due to certain actual expenses being lower than
previously estimated.

We have continued with efforts to wind-up our affairs; however, as previously disclosed we cannot control the timing of resolving
legal matters. Certain legal matters continue to take longer than anticipated to resolve, including the Thaxton Life Partners arbitration hearing, which has been postponed until mid 2009, and the motion regarding distributions to stockholders
described below. Once the legal matters have been resolved, FINOVA believes it will still need a short period of time to complete the final wind-up of our affairs. As a result, the reserve for estimated costs reflected in our Statement of Net Assets
in Liquidation currently assumes a liquidation period through August of 2009. There can be no assurance we will complete our liquidation in this time period, and the resolution of the various legal matters may extend for a longer period of time. We
are concerned about the continued delays in the legal process, particularly in regards to the motion regarding distributions to stockholders and how such delays continue to deplete assets available to settle our liabilities. We have evaluated and
continue to consider alternatives to complete the wind-up process, including transferring to a liquidating trust any assets not



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sold or distributed (subject to outstanding liabilities), depending on the progress of the outstanding legal matters. We
will continue to evaluate our progress in resolving the outstanding legal matters on at least a quarterly basis and re-evaluate our reserve for estimated costs. Refer above to Note G. Litigation and Claims for the status of our
outstanding legal matters.

Due to the fact that we do not have sufficient assets to fully satisfy all obligations to our creditors, any change to the
estimated net realizable value of our assets and liabilities results in a corresponding adjustment to the estimated settlement amount of the Senior Notes. During the three months ended March 31, 2009, the estimated settlement amount of the
Senior Notes (principal only) was reduced by $26.6 million to a balance of $99.3 million; however, we currently estimate the Senior Note holders will receive total liquidation distributions (principal and interest) of approximately $139.6 million,
which is a $0.1 million increase over our 2008 year-end estimate.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

Since emergence from chapter 11 bankruptcy proceedings in August 2001, our business activities have been limited to maximizing the value of our portfolio through the
orderly collection of our assets. These activities included collection efforts pursuant to underlying contractual terms, negotiation of prepayments and sales of assets or collateral. We have substantially completed the liquidation of our portfolio
and our focus has shifted to the continued wind down of our operations and future dissolution of our entities. We are prohibited by the Indenture governing our 7.5% Senior Secured Notes from engaging in any new lending activities or other business.
Any funds generated in excess of cash reserves permitted by our debt agreements have been used to reduce obligations to our creditors.

Because
substantially all of our assets (including cash reserves) are pledged to secure obligations under the Intercompany Notes securing the Senior Notes, our ability to obtain additional or alternate financing is severely restricted. Berkadia has no
obligation to lend additional sums to or to further invest in FINOVA. As a result of these factors and the substantial liquidation of our portfolio, our only meaningful source of liquidity is cash reserves held by the Company.

The terms of the Indenture prohibit us from using available funds (after certain permitted uses) for any purpose other than to satisfy our obligations to creditors and
to make limited payments to stockholders in certain circumstances. Under the terms of the Indenture, we are permitted to establish a cash reserve in an amount not to exceed certain defined criteria. Due to our limited sources of liquidity, the
estimation of cash reserves is critical to our overall liquidity. Cash reserve estimations are subject to known and unknown risks, uncertainties, and other factors that could materially impact the amounts determined. Due to the substantial
liquidation of our portfolio, our incoming cash flows have significantly diminished and the estimation of cash reserves has become increasingly more critical. Our cash reserve methodology has been altered to retain our maximum potential cash
requirements. As a result, we are reserving cash for the full amount of legal claims even though we anticipate settling or resolving the matters for considerably less.

In accordance with the terms of the Indenture, we are required to use any excess cash, as defined in the Indenture, to make semi-annual interest and principal payments on the Senior Notes. Additionally, the Indenture
permits voluntary prepayments at our option, which we have previously elected to make from time to time; however, due to the uncertainty of cash requirements associated with the wind-up of our affairs and matters related to the TLP Action, discussed
in Note G. Litigation and Claims, we are maintaining cash reserves to cover these potential and uncertain expenditures. As a result, we will not make future voluntary prepayments and we will not make the scheduled May 15, 2009
interest payment. The remaining unrestricted cash will be distributed in conjunction with the wind-up of our affairs and future dissolution, which is currently expected to occur by the end of August 2009, although there can be no assurance that we
will be successful in meeting that schedule. Failure to make the May 15, 2009 interest payment is not an event of default under the Indenture, which requires the Company to fail to pay two consecutive interest payments before an event of
default occurs.

The timing and amount of distributions to Senior Note holders will primarily depend on the resolution of legal matters, the extent to
which reserves for current or future liabilities are required, the length of time required to settle all of our matters and, to a lesser extent, the timing and amounts we receive for our remaining assets. Refer to Note G. Litigation and
Claims for the status of our outstanding legal matters.

During the first quarter of 2009, we made no principal payments on the Senior Notes.
Cumulative prepayments through March 31, 2009 totaled $1.54 billion, which reduced the outstanding principal to $1.4 billion and represented approximately 52% of the principal being repaid. Based on the valuation of our assets at their
estimated net realizable value and liabilities at estimated settlement amount, we currently estimate the Senior Note holders will receive additional liquidation distributions



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(principal and interest) of approximately $139.6 million, which is a $0.1 million increase over our 2008 year-end
estimate, but considerably less than the total principal and interest due of approximately $1.5 billion. The estimated settlement amount was determined solely based on the net assets available for settlement of the Senior Notes and is subject to
change due to changes in the estimated net realizable value of our net assets. We clearly do not have sufficient assets to fully repay the Senior Note obligation upon maturity in November 2009.

The Senior Notes have a first priority security interest in substantially all of our remaining assets; however, as noted above, the Indenture requires us to first use
any cash and cash equivalents to pay or to fund operating expenses, taxes and reasonable reserves for commitments and general corporate purposes.

Stockholders should not expect any payments or distributions. The Indenture contemplates that as principal payments are made on the Senior Notes, our stockholders may receive a distribution equal to 5.263% of each principal prepayment.
However, the Indenture prohibits us from making distributions to and/or repurchases from stockholders if the payments would render the Company insolvent, would be a fraudulent conveyance or would not be permitted to be made under applicable law. Any
such distribution and/or repurchase would be considered an impermissible restricted payment under the Indenture.

In conjunction with the prepayments of
the Senior Notes noted above, we have retained a total of $81.2 million as of March 31, 2009. Retained amounts have been segregated and reflected as restricted cash in our financial statements, pending their final disposition. We anticipate
that the retained amounts will eventually be paid to our creditors, not our stockholders. If the funds were to be paid to our stockholders, affiliates of Berkadia (jointly owned by Leucadia and Berkshire Hathaway), which owns 50% of our
common stock, would receive half of the retained amounts. Berkadia has advised us that it does not believe that stockholders are entitled to the retained amounts since we cannot fully satisfy our creditor obligations.

As previously reported, in June 2007 the Bankruptcy Court determined that (1) we no longer need to direct funds into a restricted account, and (2) we may use
those funds for general corporate purposes. On August 26, 2008, the Delaware District Court upheld the Bankruptcy Court ruling, but on September 23, 2008, the equity committee appealed the Delaware District Courts rulings to the
United Stated Court of Appeals for the Third Circuit. For a further discussion of the appeal and its status, see Note G. Litigation and Claims.

Based on our financial condition, there will not be sufficient funds available to fully repay the outstanding principal on the Senior Notes or to make any 5% distribution to common stockholders, absent a court order in connection with
the appeal referred to above. As a result, there will not be a return to our stockholders. Consequently, investing in the Senior Notes and common stock involves a high level of risk.

Obligations and Commitments

For a detailed listing of our significant contractual obligations and contingent
commitments, refer to our 2008 Form 10-K. There has not been any material changes during the three months ended March 31, 2009, except for payment of our quarterly management fees ($2.0 million as of March 31, 2009) to Leucadia.

Collection of the Portfolio

As noted
previously, our business activities have been limited to maximizing the value of our portfolio through the orderly collection of assets. These activities included collection efforts pursuant to underlying contractual terms, negotiation of
prepayments and sales of assets or collateral.



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The following table presents the activity in our liquidating portfolio for the three months ended March 31, 2009:



|                                           |  |   |      |  
|------------------------------------------ |  | - | ---- | -
|Liquidating Portfolio at December 31, 2008 |  | $ | 505  |  
|Cash activity                              |  |   | (216 | )
|Non-cash activity                          |  |   | (27  | )
|                                           |  |   |      |  
|Liquidating Portfolio at March 31, 2009    |  | $ | 262  |  
|                                           |  |   |      |  

Our liquidating portfolio declined to $0.3 million at March 31, 2009. Cash activity for 2009 primarily
represented collections and proceeds received on judgments and claims against former customers, while the non-cash activity primarily represented a decrease in the estimated net realizable value of certain assets due to slightly lower than
previously anticipated recovery of claims against former customers.

As of March 31, 2009, the remaining portfolio value is primarily comprised of a
number of judgments and claims against former customers (net realizable value of $0.3 million) and a few non-marketable private equity and other securities. In the majority of these instances, we did not attribute any net realizable value to these
assets due to our inability to predict the collection of any cash flows from the transactions with even a remote level of confidence. Most of these transactions were previously included in due diligence materials in an attempt to sell the assets,
but were excluded on multiple occasions by prospective buyers because of costs of collection and potential liability concerns of the buyers. Prospective buyers that specialize in these types of residual assets and claims performed due diligence, but
were not interested in making an offer. We continue to monitor these accounts for changes in facts and circumstances that would allow us to attribute value to these assets or events that would resolve their ultimate disposition. As a result, there
is the possibility that some net realizable value will be attributed to these assets in the future. An increase in the estimated net realizable value of these assets, if any, will be reflected as a change in net assets in liquidation in future
filings. Additionally, we continue to occasionally receive proceeds from trustees and liquidators for assets that in certain cases were written off years ago. These cash flows are typically immaterial and are reflected as a change in net assets in
liquidation as they are received. We expect certain of these assets will outlast the Company. In connection with or prior to the final dissolution of our entities, we anticipate assigning or transferring the rights to collection of these assets to a
trustee or receiver for the benefit of the Senior Note holders.

Liquidation Process

Due to the substantial liquidation of our portfolio, our incoming cash flows have significantly diminished and the estimation of cash reserves has become increasingly
more critical. Our cash reserve methodology has been altered to retain our maximum potential cash requirements. Due to the uncertainty of cash requirements associated with the wind-up of our affairs and resolution of matters related to the TLP
Action, discussed in Note G. Litigation and Claims, we anticipate maintaining cash reserves to cover these potential and uncertain expenditures, which will limit our ability to make future voluntary prepayments and interest payments. The
Company will not make the scheduled May 15, 2009 interest payment.

Our liquidation process is now focused on the wind down of our operations,
resolution of legal matters and the future dissolution of our entities. We are in the process of withdrawing our authority to conduct business in the states that we no longer have active assets or legal requirements that necessitate our continued
authorization to conduct business. The estimated time required to withdraw our licenses will vary by state. Many states have only taken a month or two to complete, while certain states have a more prolonged process that may take a number of months.
Additionally, there are a handful of states such as Arizona and Delaware, among others, where we do not anticipate commencing the withdrawal process until all outstanding claims and litigation have been resolved or active assets liquidated. As of
March 31, 2009, we have completed the withdrawal process for 44 states, while others are pending.

We have continued with efforts to wind-up our
affairs; however, as previously disclosed we cannot control the timing of resolving legal matters. Certain legal matters continue to take longer than anticipated to resolve, including the Thaxton Life Partners arbitration hearing, which has been
postponed until mid 2009, and the motion regarding distributions to stockholders described below. Once the legal matters have been resolved, FINOVA believes it will still need a short period of time to complete the final wind-up of our affairs. As a
result, the reserve for estimated costs reflected in our Statement of Net Assets in Liquidation currently assumes a liquidation period through August of 2009. There can be no assurance we will complete our liquidation in this time period, and the
resolution of the various legal matters may extend for a longer period of time. We are



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concerned about the continued delays in the legal process, particularly in regards to the motion regarding distributions
to stockholders and how such delays continue to deplete assets available to settle our liabilities. We have evaluated and continue to consider alternatives to complete the wind-up process, including transferring to a liquidating trust any assets not
sold or distributed (subject to outstanding liabilities), depending on the progress of the outstanding legal matters. We will continue to evaluate our progress in resolving the outstanding legal matters on at least a quarterly basis and re-evaluate
our reserve for estimated costs. Refer above to Note G. Litigation and Claims for the status of our outstanding legal matters.

At
March 31, 2009, we had four employees. The four remaining employees are scheduled to remain through the completion of the liquidation process. The Company believes that our staffing levels are adequate to provide us with appropriate oversight
of the smaller operation, while maintaining adequate resources to deal with outstanding legal matters and the future dissolution of our entities. We continue to operate as a public company during the liquidation under a Management Services Agreement
with Leucadia that expires in 2011.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this report are forward-looking, in that they do not discuss historical fact, but instead reflect future expectations, projections,
intentions, or other items. Forward-looking statements are made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include assumptions, estimates and valuations implicit
in the financial statements and related notes, as well as matters discussed throughout this report including, but not limited to projections, our Plan of Liquidation and the section captioned Item 2. Managements Discussion and
Analysis of Financial Condition and Results of Operations. They are also made in documents incorporated in this report by reference, or in which this report may be incorporated.

Forward-looking statements are inherently subject to risks and uncertainties, many of which cannot be predicted or quantified. When used in this report, the words estimate, expects,
anticipates, believes, plans, intends and similar expressions are intended to identify forward-looking statements that involve known and unknown risks and uncertainties. The risks, uncertainties and
other factors that could cause our actual results or performance to differ materially from those contemplated by the forward-looking statements include, but are not limited to, the following: whether we can assure Senior Note holders of the timing
or amount of their liquidating distributions; whether potential purchasers of our assets may try to take advantage of our liquidation process and offer less-than-optimal prices for our assets; the increasing difficulty in offsetting costs of
collecting the remaining portfolio; our Board may abandon the Plan of Liquidation; whether we transfer any assets to a liquidating trust; whether new securities lawsuits will be filed against us; our ability to sell the remaining assets; current and
future legal and administrative claims and proceedings against us that may result in increased costs and diversion of managements attention; current and future obligations to creditors; our ability to meet obligations is impacted by cash
reserve estimations; cash investments are subject to credit exposure and interest rate fluctuations; our ability to retain our employees; our ability to utilize tax attributes; and our ability to be exempt from the registration requirements of the
Investment Company Act of 1940. For additional information, see Part I, Item 1A. Risk Factors in our 2008 Form 10-K.

Undue reliance should not be
placed on these forward-looking statements, which are applicable only as of the date of this Report. We do not intend to update forward-looking information to reflect actual results or changes in assumptions or other factors that could affect those
statements. We cannot predict the risk from reliance on forward-looking statements in light of the many factors that could affect their accuracy.



|Item 4T. | Controls and Procedures
|-------- | -----------------------



|(a) | Our management evaluated, with the participation of our principal executive and principal financial officers, the effectiveness of our disclosure controls and procedures (as defined
in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)), as of March 31, 2009. Based on their evaluation, our principal executive and principal financial officers concluded that our
disclosure controls and procedures were effective as of March 31, 2009.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(b) | There has been no change in our internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during our fiscal
quarter ended March 31, 2009, that has materially affected or is reasonably likely to materially affect, our internal control over financial reporting.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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PART II OTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------

See Part I, Item 1, Note G.
Litigation and Claims for a discussion of certain legal proceedings.



|Item 1A. | Risk Factors
|-------- | ------------

There were no material changes from the information
provided in our Annual Report on Form 10-K for the year ended December 31, 2008.



|Item 6. | Exhibits
|------- | --------



|     |  |                                                                                                                                            
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------
|31.1 |  | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                        
|     | 
|31.2 |  | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                        
|     | 
|32.1 |  | Certification of Chief Executive Officer pursuant to 18. U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|     | 
|32.2 |  | Certification of Chief Financial Officer pursuant to 18. U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



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THE FINOVA GROUP INC.

Signatures

Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



|                  |  |  |  |                                     |  |                                                                                                           
|----------------- |  |  |  | ----------------------------------- |  | ----------------------------------------------------------------------------------------------------------
|                  |  |  |  | THE FINOVA GROUP INC.  (Registrant)
|                  |  |  | 
|Date: May 4, 2009 |  |  |  | By:                                 |  | /s/    Richard A. Ross                                                                                    
|                  |  |  |  |                                     |  | Richard A. Ross, Senior Vice President  Chief Financial Officer & Treasurer (principal financial officer)



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EXHIBIT INDEX



|              |  |                                                                                                                                            
|------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description                                                                                                                                
|              | 
|31.1          |  | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                        
|              | 
|31.2          |  | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                        
|              | 
|32.1          |  | Certification of Chief Executive Officer pursuant to 18. U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|              | 
|32.2          |  | Certification of Chief Financial Officer pursuant to 18. U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.