We reported to you in detail about the Tousa Bankruptcy Court decision in November, 2009 which found payments to lenders and the grant of associated liens were avoidable as fraudulent conveyances. The impacted Tousa lenders appealed the Bankruptcy Court’s decision to the United States District Court, which reversed the Bankruptcy Court’s decision. The Tousa estate then appealed the District Court’s reversal to the U.S. Court of Appeals for the 11th Circuit, which AFFIRMED the Bankruptcy Court’s decision. The 11th Circuit ruled that:

(1) certain secured obligations Tousa, Inc. and its subsidiaries incurred to payoff a prior lender, and the associated liens on the subsidiaries’ assets, can be avoided as fraudulent conveyances; and (2) the prior lender who received the payoff must return the value it received to the bankruptcy estate.