PokerStars Pot-Limit Omaha High, $0.02 BB (5 handed) Poker Stars Converter Tool from FlopTurnRiver.com (Format: FlopTurnRiver Cards)

BB ($3.64)
UTG ($0.82)
MP ($4.64)
Hero ($7.87)
SB ($4.03)

Preflop: Hero is Button with , , , .
UTG calls $0.02, MP calls $0.02, Hero raises to $0.11, SB calls $0.10, 1 fold, UTG calls $0.09, MP calls $0.09.

Flop: ($0.46) , , (4 players)
SB checks, UTG bets $0.46, MP calls $0.46, Hero raises to $2.3, SB folds, UTG calls $0.25 (All-In), MP raises to $4.53, Hero calls $2.23.

Turn: ($2.59) (3 players, 1 all-in)

River: ($2.59) (3 players, 1 all-in)

Final Pot: $10.23

I heard somewhere that it can be correct to fold the nuts on the flop, is this one of those cases?

No. If you don't have a draw to a higher straight then maybe, but I fold this flop nearly zero percent of the time. If anything you could flat call on the flop to see what the turn brings since you close the action. I don't see myself just calling this flop though.

Lebowski, are you suggesting that if Hero only held the TJ here and had no draws to a better hand, folding this flop might be the right move?

I'm still having a hard time getting my head around when it's appropriate to fold the nuts...

All day every day

Negative ghostrider. It did sound like that...my bad.

Never fold here. To fold the nuts in Omaha you need very deep stacks (at least relative to the size of the preflop pot) and opponents who won't commit their stack with crap. With the preflop raise and this being $5 PLO, neither of these apply.

Also, UTG is a shorty who could have almost any 2 cards here. So really we are just in for a stack heads up against MP.

and don't forget the backdoor nut flush draw. Nothing like freerolling a guy who has the same straight as us but no suits.