A degree of certainty—for the time being—has been restored for participants in the commercial lending and debt trading markets who have been tracking the appeal of a controversial 2009 fraudulent transfer decision in the TOUSA, Inc. bankruptcy case. On February 11, 2011, Judge Gold of the United States District Court for the Southern District of Florida quashed (or nullified)ii the bankruptcy court’s decision, which ordered a group of lenders to disgorge $480 million received in connection with loans they extended to a joint venture involving TOUSA, Inc. (the “Transeastern Lenders”).

If Judge Gold’s opinion survives on appeal, it suggests that the loan markets’ worst fears arising from the bankruptcy court’s decision will not be realized. Also providing comfort to markets is a district court order issued by Judge Jordaniii in a parallel appeal involving the lenders who financed the payment to the Transeastern Lenders (the “First and Second Lien Lenders”). Judge Jordan’s order requests additional briefing on the potential impacts of Judge Gold’s opinion, but Judge Jordan expressly requires the parties to assume he adheres to Judge Gold’s opinion.