Supplier Q & A

I am in the middle of constructing a home for TOUSA. Am I required to finish the project?

All contracts with TOUSA are unaffected by the filing and will continue unless the company determines otherwise. We plan on completing all the homes in our current backlog. In fact, we do not expect our homebuilding efforts to be impacted by the Chapter 11 filing. Despite the challenging market conditions, our operations remain solid. This is strictly a financial restructuring to shed burdensome debt.

Will I be paid for amounts owed to me before the filing date?

Unfortunately, the Bankruptcy Code precludes payment for goods and services received before January 29, 2008, the date of filing except for claims that fall within the preliminary relief the Company is requesting from the bankruptcy court, including claims from vendors who can assert valid liens against the Company's property. Payments on this pre-petition indebtedness will either be paid pursuant to court authority or be settled as part of a plan of reorganization, which must be accepted by our creditors and approved by the court.

Goods and services received after the filing date can and will be paid for in the ordinary course. In fact, the Bankruptcy Code gives priority status to such payments. This means that you will receive payment in the ordinary course of business for post-petition goods and services on the same terms as existed when we filed.

How do I make sure I get paid under the terms of a Plan of Reorganization?

Early in the bankruptcy case, TOUSA will file a schedule of all known creditors and the amount TOUSA believes each creditor is owed. If you appear on the schedules and agree with the scheduled claim amount, you do not need to do anything and your claim will be paid under the terms of the plan. If you do not appear on the schedules, or if you disagree with the scheduled amount of your claim, then you must submit a claim. You will receive a claim notice in the mail in the coming weeks with instructions from the court about how and whether to submit a claim. The Court will eventually set a deadline for all claims to be filed. This deadline is known as the Bar Date. You will receive notice of this deadline once it is set. If the Company determines you have a valid claim, you will be eligible to receive the treatment described in the Plan of Reorganization. No plan has been filed or approved by the Court at this time, so we cannot say how creditors will be treated.

Do I need an attorney to file a claim?

You are not required to hire an attorney to file a claim but you may choose to do so.

What about for work started pre-petition that won't be completed until after the filing?

We will pay the portion relating to the estimated post-petition work. Payment for the prepetition portion of the work may not be paid unless the Company is authorized by court order to make the payment.

How long will it be for ordinary payments to resume?

Payments will likely resume within six to eight weeks following TOUSA's approval of the claim.

What if I wait to submit an invoice until after the filing date?

Work performed before the filing date will be considered pre-petition (and is subject to the Answer for Question #2), regardless of when you submit your invoice. Waiting to submit an invoice until after the filing date will not allow you to be paid for the work, according to provisions of the U.S. Bankruptcy Code.

Can I re-submit past invoices and get paid for them now?

No, the provisions of the U.S. Bankruptcy Code prohibit that, and filing for protection under Chapter 11 automatically triggers a halt or "Automatic Stay." This bars, among other things, all collection actions against TOUSA for monies past due.

Why should I continue to work with TOUSA when the company is having such financial difficulties?

Because, going forward, you will be paid in full for goods and services provided after the filing date as required by the U.S. Bankruptcy Code. If you are owed money for goods or services provided prior to the filing date, payment on account of your claim may be delayed until a plan of reorganization unless the Company has received authority from the Court to pay the claim sooner. We sincerely regret any hardship or inconvenience this may cause you. Be assured that the Company is working diligently to ensure prompt payment of all claims it is authorized to pay pursuant to court orders. We are hoping to put any such issues behind us and focus on our mutually beneficial business relationship going forward.

Other homebuilders have said TOUSA will have to go out of business. How do I know you will be around in a year?

Our operations remain solid and the Engle Homes, Newmark Homes, and Trophy Homes brand recognition remains strong. Chapter 11 allows TOUSA to achieve its restructuring in an orderly and timely manner and enables TOUSA to continue its plan to generate cash, reduce cash flows and deleverage its balance sheet. We expect TOUSA's daily operations to continue as usual. We will continue to build the same high-quality homes, underwrite mortgages and service our customers. In fact, customers and prospective customers should not see any impact from the filing.

Many companies that have filed for reorganization, including NVR, Inc. (Ryan Homes), Macy's, Bloomingdales, Toys 'R Us, Texaco, Continental Airlines and Delta Airlines, have strengthened their businesses and are performing well today.

Can I be paid in cash, or at least in advance?

Due to the protection the courts provide the suppliers post-petition and the court authorization we have requested to continue paying in the ordinary course for our lien-holders, we are an even better credit risk today. We cannot pay more for goods and/or services at this time. Our ability to purchase from you on favorable terms and at competitive prices is critical. We expect in the months and years ahead to be as good a customer to you as we have been in the past. We hope you will continue to work with us.

Are my liens protected?

Importantly, to avoid disruption, we are seeking court authorization to establish procedures to pay valid lien claims in the ordinary course of business. Additionally, the Company is seeking court authority to sell homes free and clear of all liens. However, any liens will attach to the proceeds of sales.

Will you ask me to lower my prices?

Our business decisions will be based upon the same criteria as before the filing and will not be affected by the restructuring. We continue to apply the factors of quality, service, delivery, and pricing as the basis for our decisions. As long as our standards are met, we plan to do business with the same subcontractors and suppliers as before.

Will my work schedule change?

The restructuring should have no impact on construction schedules.

I have additional questions. Who can I speak with?

If you have any questions or concerns, please do not hesitate to call our toll-free information hotline at (866) 588-9290. You can also contact your normal TOUSA representative.

For general questions about Chapter 11 click here.