U.S. Watchdog Opposes to Caesars Entertainment Subsidiary’s Bankruptcy Plan

by San Antonio Attorney

A bankruptcy watchdog of the United States government objected to a bankruptcy exit plan of a Caesars Entertainment unit on Nov. 21.  This threatens to disrupt a mainly consensual plan to cut down $10 billion of liabilities.

The Caesars Entertainment Operating Co (CEOC), a subsidiary of Caesars, filed for bankruptcy protection almost two years ago in the midst of claims by creditors that its parent company had robbed the unit of its prime assets and remove debt securities.

Disputing parties came up with a peace agreement in September that entails a $5 billion payment by Caesars to the subsidiary’s restructuring plan in return for giving up billions of dollars in possible future legal claims.

In a bankruptcy court filing in Chicago, the U.S. Trustee opposed to the absolution and the releases for acts that exceeded the Chapter 11 cases or plan.  The U.S. Trustee viewed the releases as immunity.

An independent examiner’s report last March state that Caesars and its private equity sponsors TPG Capital Management LP and Apollo Global Management LLC could be caught up to more than  $5 billion in damages for the suspected stripping of assets.

Caesars, TPG and Apollo have rebuffed any unlawful activity.

The U.S.  Trustee also opposed the releases as excessively wide for protecting against deliberate wrongdoing or fraud.

A court trial for bankruptcy confirmation is slated in January.

In the event the U.S. Trustee disapproves with the confirmation, an appeal to a higher court may happen.

TPG and Apollo created Caesars by means of the $30 billion takeover of Harrah’s Entertainment about eight years ago, just before the U.S.  financial crisis in 2008.

The reorganization plan of CEOC includes dividing into a real estate trust managed by lenders and another operating company that is going to form a portion of a new restructured Caesars dominated by creditors.

TPG and Apollo will be able to keep their 16% combined stake in the reorganized Caesars.

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