CVO Holders Hit Progress Energy With $42M Fraud Suit

Law360, New York (August 11, 2011, 8:19 PM EDT) -- Progress Energy Inc. was accused Tuesday in New York of stiffing holders of its contingent value obligations some $42 million by adopting an improper tax position in 2005, in violation of an agreement related to an earlier merger.

M.H. Davidson & Co. and Davidson Kempner International Ltd. accuse Progress of breaching its obligation to good faith dealing by taking a certain tax position for the sole purpose of withholding profits from CVO holders.

A representative for Progress declined to comment Thursday.

The defendant distributed the CVOs...
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