Despite not having final court approval for an initial $135 million in debtor-in-possession financing to keep operations afloat during its bankruptcy proceedings, the executive team at TOUSA announced its intention to grow the borrowing amount to $650 million to refinance a first lien term loan.

In an 8-K filed on the morning of Friday, Feb. 8 with the Securities and Exchange Commission, management stated that, if the first lien lenders consent, it will use roughly $515 million of the total financing amount offered by Citigroup Global Markets to refinance the outstanding first lien debt at a base rate loan interest rate of 4.5% per year.

Management originally obtained the first lien loan in July when it brought the whole of its 2005 Transeastern Homes joint venture with Florida developer Art Falcone onto TOUSA's balance sheet. Management had secured roughly $506.8 million in first- and second-lien debt to buy out the 2005 JV debt, putting to rest lawsuits filed by both financiers of the deal and unhappy shareholders who argued that management failed to fully disclose the $857 million venture's risks.

But whether management will actually close the refinancing deal is uncertain. Judge John K. Olson of the Fort Lauderdale division of the U.S. Bankruptcy Court tentatively approved the $135 million in debtor-in-possession financing, a move that sparked fierce objections from a group of 10 creditors, including both senior and senior subordinated note holders.

The group claimed that the emergency financing, which trumps all other debt, is unnecessary. Moreover, the creditors accused the company of fraudulent conveyance with regard to the company's first- and second-lien debt. They argued that management unnecessarily drove TOUSA's home building subsidiaries to insolvency by forcing them to secure the parent company's $506.8 million in loans to buy out the Transeastern JV with liens on their properties.

Management is pushing to expedite both the final financing approval and the immediate hiring of a host of finance and accounting specialists. However, Donald F. Walton, the acting U.S. trustee in the case, opposes the company's demand for a waiver of the standard 20-day waiting period of approval, asserting that the company's financial position did not mandate any acceleration of process.