Crescent Resources Creditors Seek $1.19 Billion from Duke Energy

The distribution to Duke was part of Duke’s sale of 49% of Crescent to Morgan Stanley in 2006. Creditors’ Trust claims the transaction doomed Crescent and ultimately caused its 2009 bankruptcy.

Palm Coast, FL – September 11, 2010 –Creditors of Charlotte-based real estate developer Crescent Resources LLC filed a lawsuit September 3rd against its former owner Duke Energy Corp. and several former Crescent executives. The lawsuit claims that a $1.19 billion distribution from Crescent to Duke funded by $1.5 billion in loans in 2006 caused the company’s 2009 bankruptcy. The transaction was tied to Duke’s sale of 49% of Crescent to Morgan Stanley Real Estate Fund.
Crescent and its subsidiaries developed scores of luxury communities in the southeast and as far west as Arizona. They developed Grand Haven and The Landings in Palm Coast, FL. and still own several local properties including four golf courses; Grand Haven, Cypress, Pines, and Matanzas (closed).
The complaint alleges:
  • Fraudulent Transfer
  • Wrongful Distribution
  • Unjust Enrichment
  • Breach of Fiduciary Duties
  • Civil Conspiracy
  • Equitable Subordination of Claims
It charges that Duke and certain Duke and Crescent Resources executives engineered a transaction (the 2006 Duke Transaction) in which Crescent Resources was required to borrow $1.225 billion, open other credit facilities and immediately transfer $1.187 billion directly to Duke. The transaction benefitted Duke, not Crescent Resources "which had no viable business plan upon which it could repay its lenders; no viable means of servicing this debt; and was in fact rendered insolvent as a result of these transactions."
The complaint was filed by the Crescent Resources bankruptcy trustee on behalf of over 1,000 creditors. The case mirrors in many ways suits brought against Credit Suisse and developers Ginn/Lubert-Adler and Yellowstone Club (Tim Blixseth) by the respective trustees in those bankruptcy cases. The cases are similar in that they allege that the equity holders, Bobby Ginn, Lubert-Adler, Tim Blixseth, and Duke Energy saddled their companies with unmanageable debt by taking substantial portions of massive loans as distributions. In each case, the lawsuits allege the actions left the companies insolvent and doomed to bankruptcy. The defendants profited at the expense of the company’s creditors.
Crescent Resources Litigation Trust v. Duke and Dillworth v. Ginn have something else in common; a Palm Coast, FL connection. Since 2000, Ginn was the area’s most prominent developer followed closely by LandMar Group, a Crescent Resources subsidiary.
5 replies
  1. George Meegan
    George Meegan says:


    An old saying "use OPM" comes to mind as it must have to Duke and Ginn, and many others. That’s "Other Peoples Money" who usualy are sucked in by the thought of making profit as the proformo’s indicate in their pie in the sky math. The only thing is that these investors, were told that they were to use due diligence to conclude if they agreed with the math and were on their own, as informed investors. Just like the many over priced homes that at the time looked OK, as who knew the sky was actualy falling. So now to get more OPM the lawyers are geting those that lost money another chance at the pie in the sky returns, to ease the pain of being loosers. The value of assets that were lost is now a matter of history, as a 20-20 look shows. Projecting asset values into the future, is best done by looking back at history, which now is holding the economy from recoving, as many hold cash, and solid assests like gold to feel more secure. That makes capitalism a son of socialism as we fell beter spredding the risk by having government use tax payers money to mother the economy, a now slant eyed child.

  2. Ken Kunda
    Ken Kunda says:

    Need help

    I am ready to build on a lot I own in Osprey Cove, St. Mary’s GA. GOTOBY says the club has been sold. Who do I call to find out where this stands and to reach out to them on their plans for the club. Obviously I won’t build now until all of that is resolved. I am only moving their for their wonderful golf course.Can you provide some direction on this?

  3. Toby
    Toby says:

    Reply to Ken

    I don’t think the lawsuit will have any affect on Osprey. Crescent has decided to divest this property.

    The course and lots are "under contract" which means they have agreed on terms. Typically a contract allows a specified amount of time for the buyer to perform due diligence. During that time, they may not want to release information about the buyer or the buyers future plans.

    You might check with Hampton Golf in Jacksonville. They are currently operating the club for Crescent Resources. Or you could call Jess Simmons at CB Richard Ellis (the real estate broker). His number is 904-633-2610.

  4. Derrick Rhame
    Derrick Rhame says:


    I have found the whole trip dopwn on DE and how and Bonds they use as hedge against the debts they owe and now i have a Non Profit which i teach Trust estate and how to use that same Bond to discharge their debt from the Estate back to these crooks and liers like DE and others who have never gave full disclosure on their contracts ,i have found the Stone of Alchemy ,soon they shall all fall

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