The three-sided conflict known as the Battle of Capital Cay unfolded during the Aquilaris campaign within the tumultuous era of the Republic Dark Age. In the year 1032 BBY, Capital Cay, a crucial port city situated on the world of Aquilaris, found itself under the control of Daimanate forces, representing the most recent expansion of the Sith's fragmented territories. The Daimanates then faced an assault from two distinct entities: the Hutt crime lord Zodoh, and the forces of the Galactic Republic, whose presence was embodied by the Jedi Knight Kerra Holt alongside Grace Command. With the destruction of Zodoh's warship, the Stormdriver, coupled with the subjugation of the Daimanate garrison, Grace Command successfully seized control of the city and declared the 'liberation' of its enslaved inhabitants.
Following the tragic Massacre of Aquilaris perpetrated by elements of the Chagras Hegemony in 1042 BBY under the command of the Sith Lord Odion, Aquilaris became subject to a succession of Sith warlords, including figures like Ayanos Bactra and Daiman. Upon the Bactranate's collapse in 1032 BBY, the Daimanate assumed control of Aquilaris. Under Daiman's rule, Aquilaris was exploited as a source of seafood, intended to sustain the Daimanate's ongoing war efforts. By this time, the planet had garnered the attention of Jedi Knight Kerra Holt, who, having fled Aquilaris during her childhood, harbored a strong desire to liberate the planet from Sith oppression. Her infiltration was prompted by a distress signal originating from a member of the Seacropper's Guild. Simultaneously, the Hutt crime lord Zodoh also set his sights on Aquilaris, seeking to extend his slave-trading and munitions operations into the Grumani sector. This sector had become a Sith stronghold ever since the Republic Dark Age forced the Galactic Republic to retreat to the relative safety of the Core Worlds.
Zodoh's fleet circumvented Daiman's orbital defenses by initiating their exit from hyperspace within the Daimanate's patrol zone. This maneuver caught the planetary defenses of Aquilaris entirely off guard. Leading an initial assault force composed of Intruder-class starfighters, Zodoh initiated an aerial assault on Capital Cay, a vital port city located on Aquilaris. Within a matter of minutes, Zodoh's forces had successfully neutralized the artillery defenses, compelling the Daimanate garrison to retreat. Amidst this turmoil, Holt covertly entered Capital Cay aboard a food transport and eliminated the garrison commander. Upon reaching the Seacropper Guild's dormitories, she encountered her long-time friend, known as "Old" Padgett. Subsequently, Holt endeavored to evacuate the slaves aboard her passenger transport. However, a significant number of the slaves displayed a lack of interest and apathy toward their liberation, having been reduced to a state of dependence on Deluge, an addictive spice employed as a substitute for sustenance. Due to damage sustained by the fishing submersibles and eel traps, the seacroppers were unable to engage in fishing activities, leading many of them to succumb to drug-induced states. Kerra managed to reconnect with a former acquaintance, a Human male named Joad Kreel. He informed Holt that she was wasting her time, and then revealed that the distress call was, in reality, a coded signal intended for spacers, requesting additional supplies of the addictive substance. Holt was frustrated to discover that her efforts had been in vain, as the prisoners exhibited complete indifference to the prospect of freedom, and she was further incensed by their perceived lack of fighting spirit.
While engaged in a heated discussion with Kreed, they were interrupted by a lightning strike emanating from Zodoh's Stormdriver, a capital ship outfitted with vaporators capable of extracting all moisture from an atmospheric region and redirecting it into storms and floods. Having established local atmospheric control over Capital Cay, the Stormdriver initiated a surge of floodwater, which swept away the remnants of Daiman's garrison into the surrounding sea. As the Stormdriver moved over the bay, it came under attack from Holt, who discharged her blaster pistol at the machine in a desperate attempt to disable it. However, Holt's situation was salvaged by the arrival of Captain Jenn Devaad's squadron of Fire Lotus-class starfighters from Grace Command, a pro-Republic relief organization based on Alderaan. Despite the Republic's withdrawal from many of the outlying regions, Devaad's Death Squadron had persisted in their fight against the Sith and other threats. Opting to conserve firepower and having accomplished the objectives of his Aquilaris mission, Zodoh ordered a strategic withdrawal back to his fighter carrier, the Voracious, which was positioned in the Aquilaris system.
Following the conclusion of the battle, Grace Command systematically eliminated the remaining Daimanate forces on Aquilaris and liberated the populace. Devaad pledged that the Republic would dispatch additional food and medical supplies to aid the population. However, Grace Command was, in reality, a black-ops unit established by Baron Lemayne with the explicit purpose of undermining the Sith war effort. Under the guise of Operation Deluge, Grace Command orchestrated a plan to destabilize Sith-held worlds by disseminating the Deluge drug among their inhabitants. Their strategy involved "liberating" Sith-controlled worlds, only to subsequently withdraw, allowing Sith forces to regain control. In the process, the Sith's military forces would also become addicted to Deluge, rendering them ineffective. Despite its controversial nature, Lemayne's tactic achieved a degree of success in weakening Sith resistance to the Republic.
The Battle of Capital Cay was initially introduced as part of the exposition in Knight Errant: Deluge 1, which premiered on August 17 2011. It marked the reintroduction of the main protagonist, Jedi Knight Kerra Holt, while simultaneously serving as a mechanism for introducing new characters, including the antagonistic Lord Zodoh, supporting characters such as Joad Kreel, "Old" Padgett, and Captain Jenn Devaad. Furthermore, the battle introduced new plot elements, such as the involvement of the Hutts as a significant player during the New Sith Wars, while also amplifying the role of secular Galactic Republic entities like Grace Command and Devil Squadron. The story script was crafted by John Jackson Miller, who was also responsible for introducing the Star Wars: Knight Errant comic series into the broader Star Wars Expanded Universe.