Tousa, Inc.—For Lenders, an Encouraging Development, but the Saga Continues

22 February 2011
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This client update discusses two issues of interest to the lending community from the recent district court decision regarding the Transeastern Lenders in the Tousa, Inc. bankruptcy: (1) whether indirect benefits are sufficient to shield upstream guarantees from fraudulent conveyance risks; and (2) whether prior lenders face special risks when paid from new loans supported by additional guarantees.