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- maintaining the status quo of the Fund and its assets pending the

transfer of control of the Fund and its assets to a replacement manager as directed

by the Committee.

The Committee seeks an order maintaining the status quo to ensure

that HCMLP takes no actions in respect of the Fund and its assets other than in the

ordinary course until HCMLP transfers control of the Fund and Fund assets to the

replacement manager as directed by the Committee. Without an order maintaining

the status quo, the Committee faces a substantial risk of irreparable harm because

HCMLP may take actions in an attempt to undermine the Committee's ability to

transfer control of the Fund or Fund assets to the replacement manager. HCMLP

has demonstrated through its ongoing willful misconduct, lack of transparency, and

past actions with respect to Fund assets that it will take actions to thwart the

Committee's control rights. HCMLP also may take actions to attempt to

wrongfully dissipate Fund assets or put them beyond the reach of the replacement

manager, and an order to maintain the status quo would prevent them from taking

those actions.

I. NATUREOFTHEACTION.

1. In July 2011, HCMLP, Highland Crusader Offshore Partners,

L.P. (the "Master Fund"), Highland Crusader Fund, L.P. ("Onshore Fund"),

Highland Crusader Fund, Ltd. (140ffshore Fund I"), Highland Crusader Fund II,

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Ltd. ("Offshore Fund II" and together with the Master Fund, the Onshore Fund,

and Offshore Fund I, the "Highland Crusader Fund" or "Fund"), and most

investors of the Crusader Fund

2.

3. On April 26, 2016, the Committee discovered that HCMLP

wrongfully

That willful misconduct was in blatant violation of the Plan. -

That theory is baseless.

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4. Since discovering that misconduct on April 26, 2016, the

Committee has consulted with its legal and financial advisors to consider all

options. The Committee identified a potential replacement manager and

determined a legal structure to hold the general partner and other interests

necessary to exercise control over the Fund and Fund assets. The Committee voted

unanimously to terminate HCMLP as manager of the Crusader Fund

and to hire a replacement manager. The Committee

then authorized its legal and financial advisors to put in place the necessary legal

entities and to negotiate contracts to enable the replacement manager to take over

control of the Fund. Once the Committee had the legal infrastructure in place for

the replacement manager, on July 5, 2016, the Committee initiated the process to

replace HCMLP.

5. On July 5, 2016, the Committee provided HCMLP notice that it

was terminated

which are

described in greater detail below. (A copy of the Notice of Termination is attached

as Exhibit B.) HCMLP has willfully

and thus the Committee will not

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know if there are additional bases for a tennination- until it receives that

information.

6. Also on July 5, 2016, the Committee sent a letter to HCMLP,

directing HCMLP to take no actions with respect to the Crusader Fund assets or its

control structure that would impede a complete transfer of control of the Crusader

Fund and Fund assets to the replacement manager and to take no actions outside of

the ordinary course. The letter provided instructions for HCMLP to effect the

transfer of control by August 4, 2016. (A copy of the Demand Letter is attached as

Exhibit C.)

7.

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8.

9. Accordingly, the Committee seeks three forms of relief: (1) a

declaration that the Committee terminated HCMLP as investment manager of the

Crusader Fund,

(2) a declaration that HCMLP engaged in

willful misconduct or gross negligence,

and (3) an order -

-maintaining the status quo of the Crusader Fund and its assets pending

the transfer of control of the Fund and its assets to the replacement manager as

directed by the Committee.

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II. PARTIES.

A. Plaintiff.

10. Plaintiff Redeemer Committee of the Highland Crusader Fund

was created pursuant to the Plan, effective August 1, 2011.

B. Defendant.

11. Defendant Highland Capital Management, L.P. ("I-lCMLP"), is

a Delaware limited partnership based at 300 Crescent Court, Suite 700, Dallas,

Texas 75201. HCMLP serves as an agent and investment manager for the

Crusader Fund, as well as numerous other funds. As agent and investment

manager of the Crusader Fund, HCMLP owes fiduciary duties to the Crusader

Fund and its investors.

C. Relevant Non-Parties.

12. Highland Crusader GP LLC is a Delaware limited liability

corporation based at 300 Crescent Court, Suite 700, Dallas, Texas 7520 I. It serves

as the general partner of Highland Crusader Fund GP, L.P.

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13. Highland Crusader Fund GP, L.P. is a Delaware limited

partnership based at 300 Crescent Court, Suite 700, Dallas, Texas 7 5 2 0 1 . -

14. Highland Crusader Offshore Partners, L.P. {the "Master Fund")

is a Bermuda exempted limited partnership with a registered office at c/o MQ

Services, Ltd., Bermuda Commercial Bank Building, 44 Church Street, Hamilton

HM12; Bermuda.

15. Highland Crusader Fund, L.P. (the "Onshore Fund") is a

Delaware limited partnership with its principal office initially located at 13455

Noel Road, Suite 800, Two Galleria Tower, Dallas, Texas 75240.

16. Highland Crusader Fund, Ltd. ("Offshore Fund I") is a

Bermuda exempted mutual fund company with its principal office identified as c/o

JPMorgan Tranaut Fund Administration Limited, Magnolia House Building, 1st

Floor, 119 Front Street, Hamilton HM 12, Bermuda.

17. Highland Crusader Fund ll, Ltd. ("Offshore Fund II," and

together with Onshore Fund and Offshore Fund I, the "Feeder Funds") is a

Bermuda exempted mutual fund company with its principal office identified as c/o

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JPMorgan Tranaut Fund Administration Limited, Magnolia House Building, 1st

Floor, 119 Front Street, Hamilton HM 12, Bermuda.

18. Highland Crusader Holding Corporation ("Holding

Corporation") is a De.laware corporation, with a registered office at 1209 Orange

Street, Wilmington, County of New Castle, Delaware 19801. The initial sole

director of Holding Corporation was Mr. Dondero. The Holding Corporation.

19. James D. Dondero ("Mr. Dondero") is co-founder of HCMLP

and is domiciled in Dallas, Texas. Together with Mr. Okada, Mr. Dondero

controls all of the operations ofHCMLP and the Crusader Fund.

20. Mark K. Okada ("Mr. Okada") is co-founder and Chief

Investment Officer of HCMLP, and is domiciled in Dallas, Texas. Together with

Mr. Dondero, Mr. Okada controls all operations of HCMLP and the Crusader

Fund.

III. JURISDICTION.
21. This Court has jurisdiction over this dispute under the Delaware

Declaratory Judgments Act, 10 Del. C.§ 6501, and under 10 Del. C.§ 341 because

the Complaint seeks equitable relief.

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22. This Court has personal jurisdiction over Defendant Highland

Capital Management, L.P ., including pursuant to 6 Del. C. § 17-105, because it is a

Delaware limited partnership.

IV. FACTUAL ALLEGATIONS.

A. The Plan Creates The Redeemer Committee And
Vests The Redeemer Committee With Powers To
Oversee The Liquidation Of The Fund.
23. On October 15, 2008, HCMLP gave notice to investors in all of

the Feeder Funds that all outstanding shares and limited partnership interests were

being compulsorily redeemed and payment of any Redemption Amounts due to

investors was suspended. Disputes arose among HCMLP, investors that had

submitted redemption requests prior to October 15, 2008 ("Prior Redeemers"), and

investors that were being compulsorily redeemed, regarding the proper allocation

of Fund assets ("Compulsory Redeemers," and together with Prior Redeemers, the

"Redeemers").

24. Following litigation over a winding-up petition in the Supreme

Court of Bermuda, and extensive negotiations among many of the Redeemers and

HCMLP, the Plan was negotiated. The Plan became effective in August 2011.

25.

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26.

- B.

27.

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.. 28.

All distributions referred to in this

Complaint are based upon HCMLP's representations to the Committee about the

amount and timing of each distribution. The Committee has not had access to the

records necessary to verify the precise amounts actually distributed by HCMLP to

investors as of specific dates.

29.

The Committee does not yet

have access to the information necessary to determine whether HCMLP •

30.

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31.

This

provision was critical to the Plan and was subject to extensive negotiation.

32.

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C. The Plan Vests The Redeemer Committee With

The Power To Terminate HC:MLP -

33. The Plan vests the Redeemer Committee with

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34.

35.

36.

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D.

37. Between October 2011 ,

- a n d May 2012, HCMLP

Between July

2012 and February 2013,

38. By mid-2013, however, it became clear that HCMLP was no

longer actively attempting to liquidate most of the remaining assets in the Fund.

The Committee pressed HCMLP to liquidate the remaining assets. But HCMLP

Even taking account of amounts

HCMLP fell about

39. By mid-January 2014, HCMLP had made little additional

progress in liquidating Fund assets.

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E. The Committee Seeks Books And Records But

HCMLP Refuses To Provide Basic Information
About The Fund.

40. Since May 2012, the Committee, through its professional

advisors, have been making books and records requests to HCMLP

The Committee sought basic information to which it

was entitled

After repeated requests, HCMLP provided the Committee some of

the information it requested. However, HCMLP has to date refused to provide the

Committee broad categories of information the Committee has sought a n d -

This includes information essential to the

Committee's understanding of how the Crusader Fund assets are held and what is

necessary to exercise the Committee's rights to replace HCMLP as

fund manager and obtain any and all interests

41. For example, the Committee has repeatedly requested-

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Such documents are essential to the

Committee's understanding of the control structure of the Fund and the appropriate

method of liquidating the Fund's investments. HCMLP's refusal to comply with

the Committee's

F. A New York State Court Enjoins The Crusader

Fund, Prohibiting The Sale Of Certain Assets And
Limiting Cash Transfers Out Of The Fund.

42. In 2009, UBS Securities LLC ("UBSS") and UBS AG, London

("UBS AG," and together with UBSS, "UBS") sued HCMLP and numerous

Highland entities and funds, including the Crusader Fund (the "UBS Lawsuit").

UBS Securities LLC eta!. v. Highland Capital Mgmt., L.P. et al., No. 650097/2009

(N.Y. Sup. Ct.).

43. In the UBS Lawsuit, UBS alleged that HCMLP fraudulently

transferred certain assets from Highland affiliates to the Crusader Fund in 2009.

in an effort to defraud UBS.

UBS sought damages

in excess of $700 million from the defendants in that case. From the Crusader

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Fund, it sought to recover the assets that were returned to the Crusader Fund in

March 2009

44. On August 19, 2013, UBS filed an order to show cause seeking

a temporary restraining order against the Crusader Fund, which the court entered

on that same day. The August 19 Order restrained the Crusader Fund from

"transferring or otherwise disposing of property [it] received in March 2009 from

Highland Financial Partners," or, if that property has already been transferred or

disposed of, cash equivalent The temporary

restraining order did not prohibit BCMLP from liquidating Crusader Fund assets

not implicated in the UBS Lawsuit,

45. On August 26, 2013, HCMLP and UBS stipulated to a

modification of the August 19 Order, permitting the Crusader Fund to sell any

assets in the Fund,

46.

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47. On November 25, 2013, following briefing and a hearing, the

court dissolved the temporary restraining order, effective November 26, 2013.

This eliminated any restriction upon HCMLP distributing cash proceeds to the

Crusader Fund investors. Although HCMLP

on November 27, 2013, But

even counting HCMLP's

48. On January 30, 2014, the New York appellate court reinstated

the temporary restraining order, ' 4on the same terms and conditions" as the August

19, 2013 Order. Prior to the reinstatement of the TRO,

HCMLP-

49. At the time the Plan became effective in August 2011, HCMLP

was aware of the UBS Lawsuit and ofUBS's claims.

50. Notwithstanding its knowledge,

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- i n the face of the known risk of the UBS Lawsuit or for any other reason.

G.

51.

52.

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53.

54.

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55.

56. Another liquidating hedge fund managed by HCMLP, called

the Highland Credit Strategies Fund, was also a defendant in the UBS Lawsuit..

lum~elated claims

against HCMLP which were at the time the subject of a pending arbitration

between HCMLP and the Credit Strategies Redeemer Committee. In short,

57. The Credit Strategies Redeemer Committee

the Credit Strategies Redeemer Committee separately settled

UBS's claim against its Fund.

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58. The Crusader Fund Redeemer Committee

59. In light of the size of the Fund's exposure in that suit, the

Committee approved the unilateral settlement with UBS.

The settlement did not affect UBS's claims against

HCMLP.

60.

The court modified

the restraining order on June 30, 2015

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61.

On January 21, 2016, the court entered a

stipulated order that dismissed the claims against the Crusader Fund and dissolved

the temporary restraining order. On the same day, unbeknownst to the Redeemer

Committee and in clear violation and breach of express terms of the P l a n , -

H. Despite The Dissolution Of The Restraining Order,

HCMLP Continues To Delay Liquidation Of The
Fund's Assets.

62. In September 2015, the Redeemer Committee met with

HCMLP and directed HCMLP

63. HCMLP took several months to respond to the Committee's

direction

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HCMLP then refused to provide the Committee basic

information about

64.

On April 4, 2016, H C M L P -

HCMLP

then wrongfully paid itself about

in violation and breach of the and, all the

while, stonewalling the Committee's inquiries

Without informing the

Redeemer Committee and L ..." '..........._,.. also paid itself another

account at that time.

65. HCMLP similarly has dragged its feet

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66. HCMLP appears to be manipulating

I. The Committee Has Numerous Bases To

67. Based only on information provided by HCMLP to date, the

Redeemer Committee has identified several independent grounds to terminate

HCMLP- The Committee reserves the right to identify additional bases

-
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1. Cause To Terminate Exists Because

HCMLP Failed
- F o r At Least Two Consecutive
Distributions.

68.

69. On more than one occasion, HCMLP failed

for at least two consecutive distributions. HCMLP missed

70. On October 31, 2013,

leaving HCMLP roughly even

ignoring the tardiness of that distribution.

71. On the next consecutive quarter of the

HCMLP

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distributed

the

reinstatement of the TRO did not cause HCMLP to miss that distribution target.

72. On

HCMLP made no distribution on that date.

73. The Committee learned after the fact that HCMLP had earlier

missed three consecutive distribution payments in 2012.

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74.

In addition, HCMLP

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distributed only

77. On

78. Notwithstanding the foregoing, HCMLP paid itself I

HCMLP was not entitled to be paid any of those

79. Between

as described below.

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2. Cause To Terminate Exists Because

HCMLP Failed To Obtain Committee

80 .

• a.

Approval.

81.

82. HCMLP caused the Crusader Fund to

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83. HCMLP did not consult the Committee or obtain its approval

prior to and the

Committee has never ratified HCMLP's actions.

84. The Committee did not learn of

until September 2012. The Committee promptly notified HCMLP by letter on

October 9, 2012, that it did not approve

reserved its rights and

claims regarding the use of and insisted that HCMLP obtain the

Committee's advance written approval for a n y - i n the future.

85. By without Committee approval, the

Crusader Fund to the detriment of Crusader Fund investors

for the sole purpose of enabling HCMLP to

Had HCMLP simply

the Fund would not

have And if HC:MLP did not

it was not entitled to for those

quarters.

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b.
Committee Approval.
86.

- 87.

has-
According to information recently provided to the Committee

by the Fund's Administrator, HCMLP

and without seeking the Committee's approval of

the

88.

HCMLP's failure to honor and

its demonstrate HCMLP's continued

disregard for the Crusader Fund's investors and constitute willful misconduct and a

breach of its fiduciary duties as the investment manager.

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89. HCMLP also refused to honor the Committee's exercise of the

on multiple occasions because HCMLP argued that the

temporary restraining order in the UBS Lawsuit precluded

The Committee informed HCMLP of its disagreement and

directed HCMLP alternatively once

the court dissolved the temporary restraining order. On June 27, 2014, the

Committee informed HCMLP that it considered HCMLP's unilateral refusal to

honor the and failure to of the

Committee for ......._,H ......~... to be a

90. In addition to with no regard to the

need for the HCMLP

over the Committee's

express objection

91. On July 13, 2012, HCMLP informed the Redeemer Committee

that and that HCMLP would

ask the Committee to approve the

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92. The Committee raised several questions about

- a n d objected to HCMLP

93. HCMLP finalized without responding to the

Committee's questions or to its objection to the

On August 6, 2012, the Committee notified HCMLP by letter that its

94.

95. On April 5, 2013, HCMLP notified the Committee that it had

96. HCMLP did not obtain Committee approval to

nor has the Committee ratified

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97.

- 98.

99. In 2011 and 2012, HC1v1LP

The

Committee learned only after the fact and put HCMLP on notice

that it did not approve HCMLP has not provided the Committee

information since that time. On information

and belief, HCMLP has continued to engage in

ince 2012.

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I 00. HCMLP did not seek to obtain, nor did HCMLP receive,

Committee approval

101. In addition, the Committee has learned that in 2011 and 2012,

an HCMLP affiliate,

since that time have not been

disc.Iosed to the Committee.

102. HCMLP did not seek to obtain, nor did HCMLP receive,

103. HCMLP affiliate,

- i n 2011 and 2012. Again, the Committee learned

after the fact. Additional have likely occurred since that time, which

HCMLP has not disclosed to the Committee.

I 04. HCMLP did not seek or receive Committee approval for

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3. HCMLP Committed Willful Misconduct

105.

a. HCMLP's Intentional Failure To Seek

Required Committee Approvals
Constitutes Willful Misconduct.

106. As described above, HCMLP repeatedly and flagrantly ignored

the Redeemer Committee's

In addition to the fact that those refusals, individually or

collectively, constitute Cause in their own right, they each also constitute willful

misconduct by HCMLP.

b. HCMLP Committed Willful

Paying Itself
To Which It Was
Not Entitled.

107. On April 26, 2016, the Committee received the 2015 audited

financial statements for the Crusader Fund. (Ex. D-1, D-2, and D-3, 2015

Financial Statements.) Those financial statements disclosed for the first time that

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HCMLP paid itself

respectively, despite

the fact that the

(Ex. D-2, 2015 Financial

Statements at 12, Ex. D-3, 2015 Financial Statements at 13.) HCMLP had

repeatedly refused to disclose this information to the Committee in response to

questions from the Committee and the Committee's explicit direction that HCMLP

was not entitled to a

108. HCMLP's excuse is legally and factually wrong. -

The Committee never agreed t o -

- Nor is there any other legal authority to extend

- Even if the had been extended (which is not the

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case), HC:MLP is far behind

Moreover, the risk of the UBS Litigation was known to HCMLP at the time the

parties negotiated the Plan, and HCMLP assumed the risk of an adverse ruling in

that case. HCMLP's attempt to unilaterally extend the in

order to pay itself millions in

constitutes willful misconduct, and a violation of HCMLP's fiduciary duties and

obligations under the Plan and under the common law.

c. HCMLP Willful

109.

only upon

110. The Fund's 2015 audited financial statements, disclosed to the

Committee for the first time on April 26, 2016, showed that HCMLP unilaterally

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111. HCMLP had no right to take those funds, and it committed

willful misconduct by doing so. The removal of the from the Fund

Moreover, HCMLP's wrongful

now that the Committee has removed HCMLP

as manager.

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d. HCMLP Committed Willful

112. As described in Paragraphs 51 to 61, above, HCMLP refused to

effectuate
-
HCMLP's

actions resulted in the loss of a

by the Crusader Fund. HCMLP's actions causing the loss

of lcoristi:tute~d willful misconduct.

e. HCMLP Willful

113. In 2013, Credit Suisse Loan Funding LLC and Credit Suisse

AG, Cayman Islands Branch (collectively, '~Credit Suisse") sued several Highland

affiliated funds, including the Crusader Fund, to recover on unsettled trades dating

back to 2008. Credit Suisse claimed that the Crusader Fund, at HCMLP's

direction, breached an agreement to purchase about $23 mil1ion of debt in

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Westgate Investments, LLC ("Westgate"). Credit Suisse Loan Funding LLC et al.

v. Highland Crusader Offshore Partners, L.P., No. 652492/2013 (N.Y. Sup. Ct.).

114. For several years prior to the filing of that suit,

HCMLP

nevertheless refused to pay Credit Suisse the amount owed to it because other

HCMLP affiliates had separate legal disputes with Credit Suisse, and -

To effectuate

that strategy, HCMLP entered into a series of tolling agreements with Credit Suisse

regarding the unsettled trades.

115. In negotiating the tolling agreements, HCMLP failed to include

any provision regarding interest accruals. The lack of such a provision exposed the

Crusader Fund to statutory pre-judgment interest on the unpaid amount. Moreover,

HCMLP failed to comply with the controlling law in documenting the tolling

agreement, with the result that the one affirmative claim that the Crusader Fund

had against Credit Suisse was later held barred by the statute of limitations, while

Credit Suisse's claim against the Crusader Fund was preserved.

116. On September 11, 2014, the court entered summary judgment

against the Crusader Fund, holding that the Fund must pay the principal amount of

the unsettled trade, as well as pre-judgment interest at the statutory tate of 9%,

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which at that time totaled approximately $13 million. On December 22, 2015, the

appellate court affinned the trial court's summary judgment order and rejected the

Fund's position that the contractual rate of interest, and not the statutory rate of

interest, should apply to the amount of the unsettled trade.

117. On January 14, 2016, HCMLP settled the Credit Suisse lawsuit

by causing the Crusader Fund to pay to Credit Suisse. This amount

includes the interest fees that the Crusader Fund had to pay so that HCl\1LP could

seek to leverage its position in other unrelated disputes with Credit Suisse. Yet

again, HCMLP sacrificed the interests of the Crusader Fund investors by

committing willful misconduct and gross negligence and breaching its fiduciary

duties to benefit itself and its other affiliates.

f. HCMLP Committed Willful

Misconduct By Selling Another
Fund's Stake In A Key Crusader
Asset To Avoid Paying To Crusader
Fund A Substantial Control Premium.
118. of the Crusader Fund is its

minority ownership of

company which owns a number of healthcare facilities.

119. The Credit Strategies Fund, which is managed by HCMLP, also

owned a minority interest in

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120. As of 2013, Credit Strategies Fund and the Crusader Fund, in

aggregate, owned a controlling interest in The value of the funds'

controlling interest in sut1stanti:ally exceeded the value of each fund's

individual ownership without the controlling interest.

121.

- 122. In 2013, while both the Crusader Fund and Credit Strategies

Fund were seeking to liquidate their fund holdings, including their interests in

HCMLP caused Credit Strategies Fund to sell its minority interest in

to Cornerstone at a price reflecting a significant discount from

HCMLP's own valuation of that interest and without informing or seeking

approval of the sale from the Credit Strategies Redeemer Committee. HCMLP

made no effort to jointly sell the Crusader Fund's and the Credit Strategies Fund's

controlling interests, even though such a joint sale would have dratnatically

increased the value of those interests.

123. An arbitration panel has found that HCMLP committed ''willful

misconduct in its sale of Credit Strat's minority interest in Cornerstone." Credit

Strategies Fund v. HCMLP, No. 16-cv-02668, at 31 (S.D.N.Y. Apr. 26, 2016).

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This conclusion was based on, among other things, the fact that the "entire

transaction was kept secret" from the Credit Strategies Committee, that HCMLP

did not even seek to obtain a price at or above HCMLP's mark for the asset, and

HCMLP' s failure to communicate with the Credit Strategies Committee about the

sale. Id. at 32.

124. After the Credit Strategies Fund's interest in was

sold, HCMLP attempted to

The

willful misconduct identified by the arbitration panel in the Credit Strategies case

applies equally to its treatment of the Crusader Fund Committee and is consistent

with the pattern of willful misconduct observed in HCMLP's management of the

Crusader Fund.

125. HCMLP has provided no legitimate basis for selling Credit

Strategies'

HCMLP sought to benefit itself and its other affiliates at the expense of both the

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Crusader Fund and the Credit Strategies Fund by selling those Funds' combined

controlling interests separately and at an unfair discount. As a result, the Crusader

Fund both lost the benefit of a higher price that would come with a control

premium and was forced into an isolated, minority position, which is much more

difficult to liquidate at a price commensurate with the value of the holding.

HCMLP and its other affiliates, meanwhile, obtained a windfall benefit in the form

of a control premium. This was willful misconduct.

J. The Committee Terminates HCMLP, Demands

The Transfer Of Control Over The Fund And Its

126. On July 5, 2016, the Committee informed HCMLP that the

Committee had terminated HCMLP as investment manager of the Crusader Fund,

effective on August 4, 2016, (See Ex. B,

Termination Letter.)

127. Also on July 5, 2016, the Committee demanded by letter that

HCMLP take all necessary actions to transfer its voting powers, general partner

interests, and other control rights to the replacement manager as directed by the

Committee, provide all outstanding information requested, and take no actions

other than in the ordinary course pending the complete transfer of control over the

Fund to the replacement manager. (See Ex. C, Demand Letter.)

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128.

Given HCMLP's willful misconduct, lack of transparency, failure to follow the

Committee's explicit directions not to pay and lack of good

faith dealing with the Committee in connection with

the Committee determined not only that - would be a

fruitless exercise but that HCMLP remaining in control of the Fund only will

further delay liquidation of the Fund and expose investors to additional risk of

harm by HCMLP.

129. The Committee has also

has recently adopted rules to permit a party

to seek emergency relief, those rules may not be applicable

For that reason, the Committee seeks equitable relief in this Court.

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COUNT1
IMMEDIATE ENTRY OF A LIMITED STATUS QUO ORDER

130. The Committee hereby incorporates Paragraphs 1 through 129

herein.

131. On July 5, 2016, the Redeemer Committee removed HCMLP as

investment manager of the Crusader Fund for and

demanded that HCMLP transfer all of its general partner interests, voting powers,

and control powers to the Committee. In addition, the Redeemer Committee

directed HCMLP to provide Fund information or not interfere with the

Committee's right to such information, and take no actions with respect to the

Crusader Fund assets or their control structure that would impede a complete

transfer of contra1 to the Committee, to take no actions to interfere with •

- a n d to take no actions other than in the ordinary course or with the approval

of the Committee before the transfer of all voting and control powers to the

Committee as directed in its Demand Letter, until such time as control is

transferred.

132. The Committee has, contemporaneous with the filing of this

action,

the Committee seeks injunctive relief

requiring HCMLP to comply with

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The Committee has a reasonable

likelihood of success on this claim against HCMLP.

133. HCMLP's past conduct indicates a real and imminent risk that

HCMLP may act to dissipate the Crusader Fund assets or attempt to impede the

Committee's ability to take effective control, unless a limited order is put in place

to maintain the status quo pending the transfer of control.

134. The Committee will be irreparably harmed if HCMLP takes or

wastes or otherwise alienates the Fund's assets or changes the Fund's control

structure before all voting and control powers are transferred to the Committee. A

limited status quo order is necessary to preserve the status quo and to prevent

irreparable harm from actions by HCMLP inconsistent with the Committee's rights

135. HCMLP, on the other hand, would suffer no harm from a status

quo order requiring it to operate only in the normal course and with the ability to

obtain Committee approval for actions outside the ordinary course. The status quo

order simply and narrowly directs HCMLP to act within the same parameters

already set out in the Plan.

136. Based on the foregoing facts and the terms of the Plan, the

Redeemer Committee is entitled to a status quo order requiring HCMLP to take no

actions with respect to the Crusader Fund assets or their control structure that

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would impede a complete transfer of control to the Committee and to take no

actions other than in the ordinary course or with the approval of the Committee.

COUNT2
DECLARATION OF EXISTENCE O F -
(10 Del. C.§ 6501)

137. The Committee incorporates Paragraphs 1 through 136 herein.

138. The Committee has a legal interest in whether- exists to

terminate HCMLP.

139. HCMLP will contest whether it has been terminated f o r -

Among other things, HCMLP

140. The Committee and HCMLP have a real and adverse conflict

141. The determination whether

is ripe because the Committee has terminated HCMLP and, based upon HCMLP's

positions as reflected in the Fund Financial Statements, HCMLP will dispute the

142. The Plan grants the Committee the right to terminate HCMLP

as investment manager

-
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•
143. As set forth in Paragraphs 68-79, above,

144. As set forth in Paragraphs 80-104, above,

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a.

b.

c.

145. As set forth in Paragraphs 105-125, above,

a. HCMLP willfully refused to obtain approvals from the

Committee, as described in Paragraphs 80-104, above.

b. HCMLP paid itself to which it was not

entitled.

c. HCMLP

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d. HCMLP refused to

e. HCMLP refused to settle a trade between the Crusader Fund

and Credit Suisse in order to benefit HCMLP's affiliates.

f. HCMLP executed on a plan to sell the Credit Strategies Fund

and Crusader Fund stakes in a key asset separately to avoid

paying the Crusader Fund a substantial control premium.

146. This Court is a court of competent jurisdiction under the Plan.

147. IfHCMLP is terminated

COUNT3
DECLARATION THAT THE CLAIMS HEREIN
ARE CAUSED BY, OR PRIMARILY
ATTRIBUTABLE TO, HCM~RELATED PARTIES'
WILLFUL MISCONDUCT OR GROSS NEGLIGENCE
(10 Del. C.§ 6501)

148. The Committee incorporates Paragraphs 1 through 147 herein.

149.

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- 150.

151. The Committee has

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152. The Committee has a legal interest in whether the claims at

issue in the Verified Compl are caused by, or primarily

attributable to, HCM-Related Parties' willful misconduct or gross negligence

- 153. HCMLP has a legal interest in contesting that the cJaims at

issue in the Verified Complaint and Arbitration Demand are caused by, or

primarily attributable to, HCM-Related Parties' willful misconduct or gross

negligence

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154. The Committee and HCMLP have a real and adverse conflict

over whether the claims described herein are caused by or primarily attributable to

HCM-Related Parties' willful misconduct or gross negligence.

155. The determination whether the claims described herein are

caused by or primarily attributable to HCM-Related Parties' willful misconduct or

gross negligence is ripe because the Committee has terminated HCMLP in part.

and, upon information and

belief, HCMLP disputes that HCM-Related Parties committed willful misconduct

or gross negligence.

156. As set forth in Paragraphs 105-125, above, the claims described

herein and in the Arbitration Demand are primarily attributable to HCM-Related

Parties' willful misconduct or gross negligence in at least the following ways:

a. HCMLP willfully refused to obtain approvals from the

Committee, as described in Paragraphs 80-104, above.

b. HCMLP paid itself to which it was not

entitled.

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c. HC:MLP took

d.
-HCMLP refused to

e. HCMLP refused to settle a trade between the Crusader Fund

and Credit Suisse in order to benefit HCMLP's affiliates.

f. HCMLP executed on a plan to sell the Credit Strategies Fund

and Crusader Fund stakes in a key asset separately to avoid

paying the Crusader Fund a substantial control premium.

157. This Court is a court of competent jurisdiction under the Plan.

158. Based on the foregoing facts and the tenns of the Plan, the

Committee is entitled to a declaration that the claims at issue in the Verified

Complaint are caused by, or primarily attributable

to, HCM-Related Parties' willful misconduct or gross negligence.

PRAYER FOR RELIEF

WHEREFORE, the Committee requests that the Court:

A. Enter an order maintaining the status quo pending completion

of the steps necessary to transfer control of the Crusader Fund and Crusader Fund

assets to a replacement manager as directed by the Committee, and, specifically,

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prohibiting HCMLP from taking any actions with respect to the Crusader Fund, its

assets or control structure that are outside the ordinary course of business or would

impede a complete transfer of control to the replacement manager or access to

Fund information in connection with same, or taldng actions that hinder or impede

the pending sales process for the assets.

B. Declare that the Redeemer Committee- to terminate

HCMLP as investment manager of the Crusader Fund.

C. Declare that as a result of the termination

D. Declare that HCMLP engaged in willful misconduct or gross

negligence relating to its management of the Crusader Fund.

E. Declare that HCMLP has no right to

F. Award the Committee its fees and expenses, including

reasonable attorneys' fees incurred in this action; and

G. Grant the Committee such other relief as the Court may deem

just and proper.

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MORRIS, NICHOLS, ARSHT &

TUNNELLLLP

Is/ Kevin M Coen

William M. Lafferty (#2755)
Kevin M. Coen (#4775)
Glenn R. McGillivray
OF COUNSEL: 1201 N. Market Street
Wilmington, DE 19801
TerriL. Mascherin
(302) 658-9200
Andrew W. Vail
Attorneys for PlaintiffRedeemer
Shaun M. Van Hom
Committee of the Highland Crusader
Elie T. Zenner
Fund
JENNER & BLOCK, LLP
353 North Clark Street
Chicago, IL 60654-3456
(312) 222-9350

July 5, 2016

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CERTIFICATE OF SERVICE

I hereby certify that on July 8, 2016, the foregoing was caused to be

served upon the following counsel of record via File & ServeXpress:

Kevin G. Abrams
Matthew L. Miller
ABRAMS & BAYLISS LLP
20 Montchanin Road, Suite 200
Wilmington, Delaware 19807

/s/ Glenn R. McGillivray

Glenn R. McGillivray (#6057)

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