Tuesday, March 15, 2016


Caesars could face $5 billion hit from unit's bankruptcy:examiner

CHICAGO (Reuters) - Caesars Entertainment Corp (CZR.O) and its private equity backers could be on the hook for up to $5.1 billion in potential damages over a series of corporate deals that a court-ordered examiner said Tuesday led to a $18 billion bankruptcy protection filing by the casino company's operating unit.

Richard Davis and a team of lawyers have spent a year probing whether Caesars, under the control of Apollo Global Management (APO.N) and TPG Capital [TPG.UL], stripped away prime properties such as the LINQ Hotel & Casino in Las Vegas and left the company unable to pay a mountain of debt.

"The simple answer to this question is 'yes'," wrote Davis at the start of an 80-page summary of his non-binding investigation, published Tuesday.

The bankruptcy of Caesars Entertainment Operating Co Inc (CEOC) has pitted some of the biggest names in U.S. finance against each other in a year-long court battle.

Junior creditors, led by the powerful Appaloosa Management hedge fund, have alleged CEOC was picked clean of its best hotels and casinos for the benefit of the Caesars Entertainment (CEC), as well as Apollo and TPG.

Davis, a former Watergate investigator, estimated potential damages for claims that he said would have a better than 50 percent chance of success in court ranged from $3.6 billion to $5.1 billion.

Those claims included fraudulent transfers of assets and breaches of fiduciary duties against the directors and officers of the operating unit and against the parent, Caesars Entertainment, he said.

In addition, he said claims for aiding fiduciary breaches existed against Apollo and TPG. None of the claims involve criminal or common law fraud, Davis said.

CEOC said in a statement it planned to resume talks with creditors and file an updated plan of reorganization soon.

"In assessing the actions of CEC and the sponsors (TPG and Apollo), it is important to remember that the sponsors are among the most financially savvy investors in the country," Davis wrote.

Sometime in late 2012, Davis said TPG and Apollo began to implement a strategy designed to strengthen their own position in the event of a CEC or CEOC bankruptcy.

Davis said he found evidence that the operating unit was insolvent as early as 2008, which would have imposed on the business's directors a duty to act on behalf of creditors as well as shareholders.

Angry creditors have been holding out for the release of the investigation before deciding whether to back a proposal by Caesars to inject $1.5 billion into CEOC and settle the allegations of asset-stripping.

There have been myriad legal disputes stemming from the bankruptcy. Davis' investigation of Caesars comprised over 8.8 million pages of documents and interviews with 92 witnesses.

Shares in Caesars Entertainment Corp, which is not part of the bankruptcy, closed up 1.7 percent at $7.20 on Nasdaq on Tuesday.

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Well, the way they make shows is, they make one show. That show's called a pilot. Then they show that show to the people who make shows, and on the strength of that one show they decide if they're going to make more shows.

Like you, I used to think the world was this great place where everybody lived by the same standards I did, then some kid with a nail showed me I was living in his world, a world where chaos rules not order, a world where righteousness is not rewarded. That's Cesar's world, and if you're not willing to play by his rules, then you're gonna have to pay the price.

You think water moves fast? You should see ice. It moves like it has a mind. Like it knows it killed the world once and got a taste for murder. After the avalanche, it took us a week to climb out. Now, I don't know exactly when we turned on each other, but I know that seven of us survived the slide... and only five made it out. Now we took an oath, that I'm breaking now. We said we'd say it was the snow that killed the other two, but it wasn't. Nature is lethal but it doesn't hold a candle to man.

You see? It's curious. Ted did figure it out - time travel. And when we get back, we gonna tell everyone. How it's possible, how it's done, what the dangers are. But then why fifty years in the future when the spacecraft encounters a black hole does the computer call it an 'unknown entry event'? Why don't they know? If they don't know, that means we never told anyone. And if we never told anyone it means we never made it back. Hence we die down here. Just as a matter of deductive logic.