Caesars Entertainment’s Bankruptcy Mediator Steps Down

by San Antonio Attorney

The mediator assigned to resolve the bankruptcy case of Caesars Entertainment Operating Co. Inc. stepped down on Sept. 9, according to a court filing.

Caesars Entertainment filed for bankruptcy last January 2015 despite allegations that its parent company and private equity sponsors had already taken out the company’s best assets.

Joseph Farnan, a retired U.S. Judge, was assigned as the mediator for the bankruptcy case.  Farnan’s task was to guide feuding parties in reaching a settlement and pull out Caesars Entertainment from bankruptcy.

Farnan pointed that the primary reason for his resignation was the “atypical views” of mediation of Judge Benjamin Goldgar, a U.S. Bankruptcy Judge overseeing the case in a Chicago court.

Despite Farnan’s recent filing of progress in the bankruptcy case, Goldgar expressed his uncertainty over the effectiveness of mediation.

Goldgar pointed out that Farnan should testify in court for the progress of the bankruptcy mediation.

However, Farnan was concerned with the breach of confidentiality, emphasizing that the bankruptcy court does not have a proper understanding of how these disclosures will affect the case.

One of the legal disputes addressed in the bankruptcy case is how much Caesars Entertainment, Apollo and TPG should pay to the reorganization process.  This financial contribution will absolve all creditors’ claims.

Marc Rowan and David Sambur, directors of Apollo, tried to offer mediation with the junior creditors by paying $250 million, according to a court filing.  The deal was not finalized as the creditors have already sought the same amount several times, even before the bankruptcy filing took place.

Rowan and Sambur claimed that their creditors harassed them by demanding a detailed account of their financial history.  Caesars Entertainment’s parent company initially offered $4 billion dollars for the reorganization process, but this is not enough to cover junior creditor’s claims worth $12.6 billion.

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