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Tousa Wins 1st Approval Toward Liquidation

A Florida bankruptcy judge on Thursday approved the disclosure statement for Tousa Inc.'s Chapter 11 liquidation plan, allowing the beleaguered homebuilder to inch toward exiting its lengthy and litigious bankruptcy case.

U.S. Bankruptcy Judge John K. Olson said he would sign off on the disclosure statement and commended Tousa for addressing concerns raised by the U.S. Trustee's Office, which had called the statement too vague about a number of issues.

"I applaud that the concerns that the U.S. trustee raised have been accommodated," Olson said. "My sincere congratulations — this was quite an effort."

Tousa, which filed for Chapter 11 protection in January 2008, threw in the towel on trying to reorganize its business and opted for liquidation instead in May when it filed its proposed plan and disclosure statement along with the creditors committee. While the company tried to rebuild itself, the continually sluggish housing market, especially in Florida, made that impossible.

The company also spent years of litigation over a 2005 prepetition joint venture with Transeastern Properties Inc. that went sour, although the two sides eventually settled. That settlement became part of an adversary proceeding that reached the Eleventh Circuit in 2012.

With the litigation ongoing for four years, the company decided to start winding down its operations in 2009 and transitioned from built-to-order new sales and construction starts to closing sales of homes that were already under construction, and selling its remaining inventory and many land assets, according to court documents.

Akin Gump Strauss Hauer & Feld LLP's Philip C. Dublin, who represents the official committee of unsecured creditors, told Judge Olson Thursday that the plan is a compilation of at least 15 settlements.

In the proposed liquidation plan, first-lien revolver claims of $16.6 million would see a 50 percent recovery from Tousa, and first-lien loan claims of $206.2 million would see a 56 percent recovery. Second-lien term loan claims of $320.4 million would see a 4 percent recovery, and second-lien note claims of $573.5 million would see a 58 percent recovery, according to the proposed plan.

General unsecured claims, which total $106.7 million, would see at least a 5 percent recovery, the proposed plan states.

In an objection filed earlier this week, Guy G. Gebhardt, the acting U.S. trustee for the region that includes Florida, said that the proposed liquidation plan's disclosure statement glossed over too many details that would be lost on investors who, unlike Tousa and its creditors committee, haven't been mired in litigation and mediation for years.

In the hearing Thursday, the trustee's attorney Steven D. Schneiderman told the court that the objection was not made to stall or derail the case but just to help investors make sense of the case. He added that most of the trustee's concerns had since been addressed.

"I have received 30 to 40 phone calls of people asking what is happening, what does this mean?" Schneiderman said. "All I asked for was an explanation in plain language, and that's what they did."

Tousa is represented by Paul S. Singerman of Berger Singerman LLP and Richard M. Cieri and Joshua A. Sussberg of Kirkland & Ellis LLP.

The official committee of unsecured creditors is represented by Patricia A. Redmond of Stearns Weaver Miller Weissler Alhadeff & Sitterson PA, Daniel H. Golden and Philip C. Dublin of Akin Gump Strauss Hauer & Feld LLP and Lawrence S. Robbins and Michael Waldman of Robbins Russell Englert Orseck Untereiner & Sauber LLP.

The case is In re: Tousa Inc. et al., case number 08-10928, in the U.S. Bankruptcy Court for the Southern District of Florida.