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KANSAS CITY -- A lawsuit filed in the state last week on behalf of former Crescent Oil majority owner and CEO Phil Near alleges its corporate owner, Titan Global Holdings Inc., fraudulently took possession of the now bankrupt, Independence, Kan.-based company and "looted" it, after doing the same to Appalachian Oil Co. (Appco), another bankrupt company under Titan, TimesNews.net reported.
The lawsuit states that when Titan took control of Crescent in October, it "pilfered the Crescent companies of assets and cash," but never paid for the company, according to the report.
It also claims Titan promised that Crescent and Appco, as sister companies, would make one another stronger, but Titan’s "destruction of Appco had a very real, profound and pertinent adverse on what happened to Crescent and ultimately Near."
The suit stated, "Near discovered that all defendants were looting the once extremely successful operations of Appco to the tune of millions and millions of dollars, leaving it bankrupt and unable to continue operations."
The suit also claims Titan used Near’s reputation with fuel vendors to buy fuel for Appco on Crescent’s lines of credit, according to the report. Appco’s bankruptcy filings show Crescent as an "unsecured creditor" that Appco owes nearly $1.5 million for fuel, the Web site reported.
The suit names Titan CEO Bryan Chance, Titan investors Frank Crivello and David Marks, and Titan lender Greystone Business Credit as defendants along with the company itself, and claims Chance, Crivello and others promised that under Titan leadership, Crescent and Appco would enjoy "synergies" that would improve the performance of both.
Near was to be paid nearly $1 million for his 52 percent stake in Crescent, and Greystone Business Credit, a lender for Titan, was to take over Crescent’s debt with Marshall and Illsley Bank, which had been personally guaranteed by Near, according to the reprt.
However, according to the lawsuit, none of that ever happened, and Marshall and Illsley Bank declared Crescent in default on a more than $30 million debt Jan. 30. Crescent filed Chapter 11 bankruptcy Feb. 7.
In late March, Titan CEO Chance terminated Near and several other members of Crescent’s top management, the report stated, citing the lawsuit.
The sale also was to relieve Near of all personal guarantees for the debt, but the suit alleges that since Greystone never closed on the deal, Near remains on the hook for millions of dollars in debt.
"None of the promises made by defendants were fulfilled," the suit claimed. "Near has yet to receive anything of value for his ownership interest in Crescent. Instead, defendants have pilfered the Crescent companies of assets and cash (and) ... driven Crescent … into bankruptcy and have placed Near on the verge of ... the same."
Meanwhile, Appco is up for sale, with control of the company under Andy Weber, a "chief restructuring officer" who will market and sell Appco.