Senior Transeastern Lenders v. Official Committee of Unsecured Creditors (In Re Tousa, Inc.), 680 F.3d 1298

TOUSA paid a $421 million settlement to the Senior Transeastern Lenders on July 31, 2007 using proceeds from new loans secured by assets of TOUSA and its Conveying Subsidiaries.
The New Lenders provided a $200 million first lien loan and a $300 million second lien loan, both to be used to fund the Transeastern settlement.
The liens were transferred from the Conveying Subsidiaries to the New Lenders, who then paid the Transeastern Lenders and other third parties.
Six months later, TOUSA and the Conveying Subsidiaries filed for Chapter 11 bankruptcy.
The Committee of Unsecured Creditors filed an adversary proceeding to avoid the liens as a fraudulent transfer under 11 U.S.C. § 548 and to recover as a transfer for the benefit of the Transeastern Lenders under § 550(a)(1).
The bankruptcy court concluded the Conveying Subsidiaries did not receive reasonably equivalent value and that the Transeastern Lenders were entities for whose benefit the transfer was made; the district court reversed on value and remand issues, and this court affirmed in part and remanded.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether value received was reasonably equivalent for the liens	Committee: value was insufficient	Transeastern/New Lenders: value was sufficient, including avoidance of bankruptcy	Bankruptcy court did not clearly err; value not reasonably equivalent
Whether Transeastern Lenders are entities for whose benefit under §550(a)(1) liable	Committee: Transeastern Lenders benefited from the transfer	Lenders argue they are subsequent transferees, not immediate beneficiaries	Transeastern Lenders are entities for whose benefit the transfer was made under §550(a)(1)

G.E. Credit Corp. v. Murphy (In re Rodriguez), 895 F.2d 725 (11th Cir. 1990) (value for avoidance purposes includes indirect benefits; objective fairness governs)
Air Conditioning, Inc. of Stuart v. American Bank, 845 F.2d 293 (11th Cir. 1988) (section 550(a)(1) applies to benefit to creditor from transferred collateral)
Nordberg v. Arab Banking Corp. (In re Chase & Sanborn Corp.), 904 F.2d 588 (11th Cir. 1990) (flexible, pragmatic approach to property transfers in evaluating value)
In re TOUSA, 422 B.R. 783 (Bankr. S.D. Fla. 2009) (bankruptcy court’s detailed factual/mixed-value analysis supporting a lack of reasonably equivalent value)
Mellon Bank v. Official Committee of Unsecured Creditors of R.M.L., Inc. (In re R.M.L., Inc.), 92 F.3d 139 (3d Cir. 1996) (economic benefit may be future/indirect; value assessed against overall transaction)