Bankrupt homebuilder Tousa Inc. on Tuesday filed an amended Chapter 11 liquidation plan and asked a Florida bankruptcy court to approve the plan over the U.S. Trustee's objections.
Tousa said the “carefully crafted and extremely fragile agreement” addresses several objections, including those from the U.S. trustee regarding vague language, and should be approved over the trustee's other objections because they comply with applicable law and are fair and appropriate.
“Imposing the U.S. Trustee's requirement would exact a substantial burden on the debtors' already limited financial resources, thereby depleting creditor recoveries,” Tousa said.
Guy G. Gebhardt, the acting U.S. trustee for the region that includes Florida, in June 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.
While Tousa addressed those concerns, the homebuilder asked that the court overlook the trustee's other objections, including a proposal that undeliverable distributions be deposited with the clerk of court and not be forfeited to the liquidation trust, as well as an objection to the language regarding the exculpation of professionals involved in the joint plan.
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 such impossible.
The company also spent years of litigation over a 2005 pre-petition 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.
The plan is a compilation of at least 15 settlements, according to court documents.
“The story of these Chapter 11 cases seemed at times incapable of conclusion, let alone a happy one — until now,” Tousa said. “After more than five years in bankruptcy, including multiple attempts to conclude these Chapter 11 cases through various restructuring initiatives, the proponents respectfully submit that the joint plan should be confirmed.”
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.
On June 20, U.S. Bankruptcy Judge John K. Olson said he would sign off on the disclosure statement and commended Tousa for making an effort to address the concerns raised by the U.S. Trustee's Office.
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.
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