Tousa noteholders file fraudulent conveyance claims, seek avoidance of $500 million in secured debt

By Caroline Salls

Pittsburgh, Jan. 30 - Several Tousa USA, Inc. noteholders raised allegations Wednesday that the liens and claims of Tousa's pre-bankruptcy lenders and payments made to the lenders on those claims constitute fraudulent conveyances and must be disallowed, according to a filing with the U.S. Bankruptcy Court for the Southern District of Florida.

Specifically, the noteholders filed an objection to the lenders' claims and filed a draft of a complaint that seeks to avoid more than $500 million in secured debt.

The noteholders include Aurelius Capital Master, Ltd., Aurelius Capital Partners, LP, Attentus CDO I, Ltd., Attentus CDO II, Ltd., Trapeza CDO X, Ltd., GSO Special Situations Fund LP, GSO Special Situations Overseas Master Fund Ltd., GSO Credit Opportunities Fund (Helios), LP, K Squared Capital Master Fund LP and Lyxor/K Squared Capital Fund Ltd.

According to the noteholders' objection, Tousa sacrificed its subsidiaries when it made them liable for $500 million in new financing it incurred to repay its Transeastern joint venture debt.

Also, on July 31, the noteholders said Tousa entities named as defendants in a Deutsche Bank lawsuit entered into a $200 million first-lien term loan, a $300 million second-lien term loan and a revolving credit facility.

Although the Tousa subsidiaries did not receive any consideration from this new financing, the noteholders said they were made liable for the new term loans and were forced to grant liens to Citicorp in connection with the new loans.

The noteholders said the Tousa subsidiaries were rendered insolvent by their liability to the new loans.

"Tousa raided the otherwise unaffected balance sheets of the Tousa subsidiaries to pay off the Transeastern bank debt and settle the Deutsche Bank litigation, sacrificing the Tousa subsidiaries' financial health and materially impairing the Tousa subsidiaries' ability to satisfy their debts to plaintiffs and other creditors with valid claims," the noteholders alleged in their complaint.

In their objection, the noteholders said the pre-bankruptcy lenders also contractually reduced the amount of their claims against the estates of some of Tousa subsidiaries under "savings clauses," which eliminate the lenders' claims against the Tousa subsidiaries above any amount that would not render the subsidiaries insolvent.

As a result, the noteholders argued that the lenders' claims must be at least reduced to an amount that allows noteholders to be paid in full before any lenders' claims are paid.

The noteholders said the lenders cannot receive any distributions from the Tousa subsidiaries on account of their claims, and their claims must be disallowed until the court rules on the fraudulent conveyance complaint, the lender claims have been established and the lenders return all property to the estates.

Tousa, a Hollywood, Fla.-based homebuilder, filed for bankruptcy on Jan. 29. Its Chapter 11 case number is 08-10928.

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