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Tousa's Liquidation Plan Needs Redo, US Trustee Says

The U.S. Trustee's Office carped on homebuilder Tousa Inc.'s liquidation plans in Florida bankruptcy court Monday, saying that it's too vague about a number of issues, such as the payment of professional fees, including for the trustee himself.

Guy G. Gebhardt, the acting U.S. trustee for the region that includes Florida, said that the proposed liquidation plan's disclosure statement glosses 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 since the economy bankrupted the homebuilder in 2008.

"There is no doubt that the proposed plan and disclosure statement is the culmination of extensive and complicated negotiations involving many parties over an extended period of time," the trustee said in a motion objecting to the plan.

"However, in addition to those parties involved in the mediation, the disclosure statement is also being circulated to those creditors who have not spent the past several years litigating in this court, [the Southern District of Florida] or [the Eleventh Circuit]," the motion said.

In particular, the U.S. trustee said that the disclosure statement needs to spell out why some similarly situated classes of claims are receiving disparate treatment, explain why bar orders and third-party releases are necessary and fair, add more information about the amount of professional fees paid during the bankruptcy and include additional language to make it clear how the U.S. trustee's own fees will be paid.

The trustee said he objected to the plan unless the changes are made.

Daniel H. Golden and Philip C. Dublin of Akin Gump Strauss Hauer & Feld LLP, who represent the unsecured creditors committee, told Law360 on Tuesday that they were working to accommodate the trustee's requests and that they'd include any additional disclosures they can, although the issue of third-party releases and bar orders would be left for confirmation.

Tousa's attorneys didn't immediately respond to requests for comment Tuesday.

A hearing on the disclosure statement is scheduled for June 20.

Tousa 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.

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.