"JUDGE SAYS TOUSA CREDITORS CAN SUE"
Of course creditors can sue, but what this really says is that Citibank, First lien group, is providing substantial operating cash to this company and that the court is essentially giving the "committee of unsecureds" the right to put them out of business by allowing a suit against them (Citibank). It was not contemplated by them or management that this would happen. They are getting interest payments now on the cash they are providing to Tousa, but after the ruling yesterday, are now in a world of hurt.
They (citibank) got the shaft for overreaching. But being sued by unsecured creditors is NOT in debate any longer as the court has issued the order permitting the lawsuit to proceed. I strongly expect it to be settled before January if Citibank has a brain cell left. It is not good for them and could cost them at least 800 million as the Judge said.
This is a good time to hold your tousq.pk shares. Don't plan on selling and being able to buy back in when the settlement is announced. One minute they are worth 16 cents and the next they may be worth 10 bucks or 13 or 20. Could happen today or could happen in the week before the January 2009 trial which is when most settlements occur. Whatever the settlement is, that's what the shares(equity) will be worth. After that, the 2 billion dollars of encumbered assets this company currently has will see the debt dissapear by at least 40 percent. By January, the debt should be paid down a little anyway under the current plan of 90 million revenue per month. Then the 800 million windfall for fraudulent conveyance will reduce it further. Maybe 50%.