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District Court Reverses Controversial TOUSA Decision on Fraudulent Transfers by Jean E. Hanson
Fried, Frank, Harris, Shriver & Jacobson LLP - New York Office
Gary L. Kaplan
Fried, Frank, Harris, Shriver & Jacobson LLP - New York Office
Shannon Lowry Nagle
Fried, Frank, Harris, Shriver & Jacobson LLP - New York Office
Alan N. Resnick
Fried, Frank, Harris, Shriver & Jacobson LLP - New York Office
Jennifer L. Rodburg
Fried, Frank, Harris, Shriver & Jacobson LLP - New York Office
Brad Eric Scheler
Fried, Frank, Harris, Shriver & Jacobson LLP - New York Office
Bonnie Steingart
Fried, Frank, Harris, Shriver & Jacobson LLP - New York Office
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February 25, 2011
Previously published on February 22, 2011
In October 2009, the Honorable John K. Olson, Bankruptcy Judge of the United States Bankruptcy Court for the Southern District of Florida, issued a controversial decision in the case of Official Committee of Unsecured Creditors of TOUSA, Inc. v. Citicorp North America, Inc. (In re TOUSA, Inc.), in which he ordered that the sum of $403 million paid by TOUSA to settle litigation with its lenders be avoided and disgorged by the lenders and repaid as a fraudulent transfer. On February 11, 2011, Judge Olsen.s decision, and much of the basis for its reasoning, was reversed without remand by a strongly worded 113-page opinion of the Honorable Alan S. Gold of the United States District Court for the Southern District of Florida. While the District Court reversal is no doubt welcome news to the lending industry, the mere fact that there can be such divergent opinions on these issues is a reminder to lenders of the serious and far-reaching risks arising from, and in connection with, fraudulent conveyance claims.
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