Unsecured Trade Creditors Committee

ABI Committee News

U.S. Real Estate Bust Hits Lenders

In the wake of the global credit crisis, the U.S. housing market plummeted with values declining as much as 50 percent and home foreclosures at record highs. With lower asset values and frozen credit markets, it became difficult, if not impossible, for U.S. homebuilders to continue business operations. Many U.S. homebuilders, particularly those who operated on a highly-leveraged basis, have been forced to liquidate assets to pay off lenders. TOUSA Inc. (and its subsidiaries) is one of the largest U.S. homebuilders to seek chapter 11 protection. The TOUSA ruling on Oct. 13, 2009, is one of the most significant lender-liability cases in recent history. In its 182-page ruling, the U.S. Bankruptcy Court for the Southern District of Florida avoided as fraudulent conveyances secured obligations of almost $500 million and the liens granted to secure such debts. The court also ordered the lenders, which included Bank of America, CIT Group, Citigroup and Wells Fargo, to disgorge such value for the benefit of the TOUSA chapter 11 bankruptcy estate.

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Unsecured Trade Creditors Committee Session at ABI's 28th Annual Spring Meeting