Private Equity Firms Seek $750 Million in Fraud Lawsuit Against Morgan Stanley

Private equity firms Certares Management and Knighthead Capital have filed a lawsuit against Morgan Stanley for at least $750 million, alleging fraud in a deal to invest in a credit agreement for a luxury high-speed rail line. The firms claim that Morgan Stanley unlawfully restructured the deal and misrepresented terms, leading them to invest around $280 million. They are seeking an order requiring Brightline Holdings, the company developing the rail line, to prepay the loan and make the make-whole payments. Morgan Stanley denies the claims and says it will vigorously defend itself.