The 69-page amended complaint provides more specificity than the original 38-page complaint. Palm Coast’s Matanzas Golf Course never had a chance of reopening once Duke stripped Crescent’s equity.
"But the Duke Transaction destroyed Crescent’s ability to operate as it had historically operated, and deprived Crescent of the resources necessary to continue in business. The transaction immediately rendered Crescent’s business model unsustainable….""…the Duke Transaction Review Committee (comprised of Duke Energy officials) approved the 2006 Duke Transaction for both Duke and Crescent Resources.""Crescent Resources did not receive independent and conflict-free legal advice with respect to the Transaction.""In 2005, Crescent Resources’ President and CEO, Defendant Fields, had heralded, as a key part of Crescent Resources’ business, that its project debt levels were modest. Fields nevertheless, and in exchange for substantial personal financial benefit, expressly approved the previously unheard of level of debt in this transaction.""In short, Duke attempted a very highly leveraged transaction in a deflationary market – the results of which were predictable and devastating to the innocent creditors swept along in its wake.""The Credit Agreement requirements had a devastation effect on Crescent. First, and most critically, development was constrained by the limited cash available for capital expenditures, by the lack of bonding capacity, and by the inability to obtain project-specific financing. Crescent, as a result, was unable to continue with its development operations, could no longer sustain its planned operations, and was immediately and fatally imperiled as a result of the Transaction.""The transaction, as structured, allowed Duke to take as much or more cash out of Crescent than it would have received by selling the entire entity. The purpose of the Transaction was to allow Duke to cash out its interest in Crescent and shift the risks of Crescent’s failing business onto creditors. In fact, Duke’s credit rating improved once the transaction closed and Crescent’s liabilities left Duke’s balance sheet.""…in its role as lender, Morgan Stanley Senior Funding, Inc. did not actually retain any exposure on the loan, but instead syndicated 100% of its interest in the loans.""The 2006 Duke Transaction gave Morgan Stanley a way to raise $415 million from its investors, launch a major new fund, and earn roughly $8 million in additional asset management fees on top of the fees it was earning as a financial advisor and lending syndicate arranger.""Crescent CEO Arthur Fields initially opposed the transaction and argued in favor of keeping Crescent under Duke ownership. This was because, as Fields observed shortly after the closing, without Duke’s credit the company lacked the working capital it needed to survive. Then Duke paid Mr. Fields $38 million in cash when the Transaction closed and, based on the transaction valuation, Field’ interest in Crescent Holding was valued at an additional $16 million, for a total payout of some $55 million. Mr. Fields than approved the Transaction.""Defendants’ actual knowledge of the deteriorating market conditions, and their approval and participation of the Transaction in spite of such knowledge, constitutes actual intent fraud on Crescent and its Creditors.""Defendants’ actual knowledge of the fact that the Transaction would result in immediate failure to meet the financial covenants of the Credit Agreement (which it did from the first quarter after closing), and their approval and participation of the Transaction in spite of such knowledge, constitutes actual fraud on Crescent and its Creditors."Crescent Resources Litigation Trust v. Duke Energy Corporation – First Amended Original Complaint