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Creditors Drop Lawsuit Against Lennar

khts_businessnews3Creditors in a failed deal with Lennar Corp. to build massive housing tracts on the last major parcel of undeveloped land in Los Angeles County have dropped a lawsuit accusing the construction giant and a former subsidiary of defrauding California's public pension fund and others.

The plaintiffs, identified as the LandSource Creditor Litigation Liquidating Trust, wrote in a court filing last week that they were voluntarily dismissing the suit, which had claimed that Lennar and the subsidiary, LNR Property Corp., engineered a transaction to cash in on $1.4 billion of debt they knew they would never be able to repay.

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The suit was filed in Delaware in July, but U.S. Bankruptcy Judge Kevin J. Carey signed off on several delays over the year that kept it from ever going to trial. The filing did not stipulate terms of the dismissal of the suit, which had sought $700 million that plaintiffs alleged was fraudulently transferred to LNR.

The complaint did not name Lennar, which was released from liability in claims concerning the venture, known as LandSource Communities Development LLC, as part of a bankruptcy settlement.

The suit was dismissed with prejudice, meaning the LandSource creditors who filed the complaint are barred from filing another case on the same claim.

Plaintiffs' lawyer Michael Lynch refused to comment Friday, citing a confidentiality agreement.