FileNotFoundException for default-formatting.properties on weblogic restart

I managed to get confluence running and configured on WLS 8.1 sp 2. On app server restart I get the following error:

java.io.FileNotFoundException: target\default-formatting.properties (The system
cannot find the path specified)
at java.io.FileOutputStream.open(Native Method)
.
.
.
at com.atlassian.confluence.util.GeneralUtil.saveDefaultFormattingProper
tiesFile(GeneralUtil.java:129)
at com.atlassian.confluence.util.GeneralUtil.<clinit>(GeneralUtil.java:5
7)
at com.atlassian.confluence.setup.webwork.ConfluenceVelocityContext.<ini
t>(ConfluenceVelocityContext.java:26)
at sun.reflect.NativeConstructorAccessorImpl.newInstance0(Native Method)

at sun.reflect.NativeConstructorAccessorImpl.newInstance(NativeConstruct
orAccessorImpl.java:39)
at sun.reflect.DelegatingConstructorAccessorImpl.newInstance(DelegatingC
onstructorAccessorImpl.java:27)
at java.lang.reflect.Constructor.newInstance(Constructor.java:274)
at java.lang.Class.newInstance0(Class.java:306)
at java.lang.Class.newInstance(Class.java:259)
at com.opensymphony.webwork.views.velocity.VelocityManager.init(Velocity
Manager.java:274)
at com.opensymphony.webwork.views.velocity.VelocityManager.<init>(Veloci
tyManager.java:65)