David Tepper Prevails in Caesars Bankruptcy Deal as Owners Avoid New Litigations

by San Antonio Attorney

The main winner in the bankruptcy plan of Caesars Entertainment is David Tepper, a billionaire hedge fund manager.  This became clear as the casino operator finishes a lengthy restructuring after a catastrophic buyout.

Tepper is one of the junior debt holders.  He recovered almost twice the value of the debt after the Apollo Global Management and TPG Capital yielded a bulk of their equity from the LBO agreement to bondholders so that they will be released from future lawsuit.

Tepper and other creditors have long battled with Caesars and its private equity owners on transfers of assets when the gambling business suffered financial problems, arguing that the trades were a foray on assets.  Legal action headed by Oaktree Capital and Tepper threatened to bring up recently discovered liabilities for TPG, Apollo and its major partners, speeding up a profitable resolution for bondholders.

As a result of the agreement, some of the creditors’ claims will likely increase by almost $1 billion in worth.  The rise of recovery will mostly be paid by the private equity sponsors of Caesars.  TPG, Apollo and their partners on the takeover transaction are going to give more than 14 percent of the equity they would have given in Caesars in its exit from bankruptcy protection against bondholders.

The estimated value of the equity is $950 million and is now going for a 66-cent for every dollar recovery for Tepper and other second lien creditors, compare to an earlier settlement where holders would have gotten 39-cents for every dollar.  The same percentage of recovery will be given to unsecured creditors.

Remarkably, the latest bankruptcy plan is going to withdraw all pending lawsuits and forfeit future litigation against the casino operator and its private equity sponsors as barter for the bigger recovery.

 

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