Tousa creditors committee files lawsuit to avoid and recover up to $800 million of lender group claims

By Jennifer Lanning Drey

Portland, Ore., July 15 - Tousa, Inc.'s official committee of unsecured creditors filed a lawsuit seeking to avoid and recover as much as $800 million from a group of Tousa lenders involved with what the committee alleged were fraudulent transfers made prior to the company's Chapter 11 bankruptcy filing, according to a Monday filing with the U.S. Bankruptcy Court for the Southern District of Florida.

The committee believes Tousa forced some of its subsidiaries to take on new debt in July 2007 in order to repay debt for which the subsidiaries were not liable. At the time of the transactions, the subsidiaries were either insolvent or became insolvent as a result of the transactions, the committee said.

Specifically, the creditors claimed that under Tousa's global settlement of litigation with the administrative agent for the lenders under its Transeastern joint venture, Tousa and Tousa Homes LP forced some of Tousa's other subsidiaries to become co-borrowers or guarantors under secured credit facilities of about $800 million with new lenders. The creditors said the borrowings were used to satisfy Transeastern debt and to incur other liabilities.

As they were not liable on the Transeastern debt, the subsidiaries did not receive reasonably equivalent value from the lenders for incurring the debt or from the Transeastern lenders for the transfer of $422 million used to satisfy the Transeastern debt, the committee said.

The creditors also said the subsidiaries incurred $20 million of new paid-in-kind notes for which they did not receive reasonably equivalent value.

$210 million tax refund

Additionally, the committee is seeking to avoid as a preferential transfer any security interest allegedly granted by any of Tousa's debtors to the new lenders in respect of a $210 million tax refund that Tousa received in June.

The creditors said the tax refund was earned due to significant losses in 2007 and, therefore, the lenders' interest in the tax refund could not have arisen until Dec. 31, 2007, which was within 90 days of the company's bankruptcy filing.

The committee also said the refund was transferred on account of a previous debt owed to the new lenders prior to the bankruptcy filing, was made while the company was insolvent and resulted in the new lenders receiving more than they would in a Chapter 7 case, had the transfer not occurred.

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

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