Tousa liquidation plan confirmed; effective date expected mid-August

By Jim Witters

Wilmington, Del., Aug. 1 - Tousa, Inc.'s Chapter 11 plan of liquidation was confirmed during an Aug. 1 hearing in the U.S. Bankruptcy Court for the Southern District of Florida, according to an attorney involved in the case.

Tousa attorney Josh Sussberg said the debtor anticipates going effective with the plan in mid-August.

Under the liquidation plan, Tousa will create a liquidation trust to monetize the remaining assets, which consist of cash and causes of action.

The plan is the result of three years of court-ordered mediation and negotiation and represents settlements among the debtors, the official committee of unsecured creditors, the first-lien revolving credit facility agent, the first-lien revolver sub-agent, the first-lien term loan agent, the second-lien term loan agent, the first-lien revolver lenders, the first-lien term loan lenders, the second-lien term loan lenders, the settling Transeastern lenders, MatlinPatterson, Aurelius, Monarch and the non-defendant directors and officers.

Treatment of creditors

Under the confirmed plan, treatment of creditors includes the following:

• Holders of first-lien revolver claims have been satisfied in full during the Chapter 11 cases, except for unpaid post-petition interest. Holders of allowed first-lien revolver claims will receive in cash a proportional share of the default interest amount, 34.4% of which is deemed to be paid from Tousa and 65.6% from the conveying subsidiaries;

• Holders of first-lien Tousa term loan claims will receive payment in cash of their proportional share of the encumbered assets at Tousa, plus their share of the term loan lender tax refund recovery as determined under the mediation settlement.

On account of their first-lien term loan deficiency claims, holders of first-lien term loan claims will receive payment in cash of their applicable share of the unencumbered assets at Tousa, the Tousa term loan lender disgorgement share and the unsecured creditor tax refund recovery, which were determined as part of the mediation settlement, plus liquidation trust interests entitling such holders to cash distributions from the liquidation trust as the RSUI Insurance coverage action and the remaining contingent assets of the plan debtors are settled or otherwise resolved.

On account of their third-party claims settled pursuant to the plan, they will receive a proportional share of the term loan lender D&O recovery, which was determined as part of the mediation settlement, plus liquidation trust interests entitling such holders to cash distributions from the liquidation trust as the Transeastern litigation is settled or otherwise resolved.

Under the intercreditor agreement, cash distributions otherwise allocable to holders of second-lien term loan claims against Tousa on account of their second-lien term loan deficiency claims will be reallocated on a proportional basis to holders of first-lien term loan claims against Tousa;

• Holders of second-lien term loan claims against Tousa will receive, on account of their second-lien term loan deficiency claims, their proportional share of liquidation trust interests entitling such holders to cash distributions from the liquidation trust as the RSUI Insurance coverage action and the remaining contingent assets of the plan debtors are settled or otherwise resolved.

On account of their third-party claims settled pursuant to the plan, holders of second-lien term loan claims will receive their applicable share of the term loan lender D&O recovery, which was determined as part of the mediation settlement, plus liquidation trust interests entitling such holders to cash distributions from the liquidation trust as the Transeastern litigation is settled or otherwise resolved;

• Unsecured creditors at Tousa will receive payment in cash of their applicable share of the unencumbered cash at Tousa, the Tousa term loan lender disgorgement share and the unsecured creditor tax refund recovery, which were determined as part of the mediation settlement, plus their share of liquidation trust interests entitling such holders to cash distributions from the liquidation trust as the remaining contingent assets of Tousa are settled or otherwise resolved; and

• Unsecured creditors at the conveying subsidiaries will receive payment in cash of their applicable pro rata share of the unencumbered cash at the applicable conveying subsidiary and their applicable pro rata share of the Monarch settlement payments, the unsecured creditor D&O recovery, the Transeastern offshore disgorgement and the conveying subsidiaries term loan lender disgorgement share, each of which were determined as part of the mediation settlement.

They also will receive liquidation trust interests in the series corresponding to the conveying subsidiary against which such unsecured creditor holds a claim entitling such holders to cash distributions from the liquidation trust as the Transeastern litigation, the RSUI Insurance coverage action and the remaining contingent assets of each applicable conveying subsidiary are settled or otherwise resolved.

Tousa is a Hollywood, Fla.-based homebuilder. The company filed for bankruptcy on Jan. 29, 2008 under Chapter 11 case number 08-10928.

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