Caesars Entertainment could face $5 billion in damages because of the bankruptcy of its operating unit CEOC.
A court-ordered investigation of the parent company’s handling of the bankruptcy was completed this week and the results were much more creditor friendly, as one analyst put it, than had been anticipated.
Examiner Richard Davis and an army of lawyers, Reuters reported, were investigating claims by creditors that the operating unit was “plundered” for the benefit of the parent company and its two largest private equity owners TPG Capital and Apollo Global Management.
While the report is nonbinding, junior creditors led by the Appaloosa Management hedge fund will seize upon its findings to demand a better payout in ongoing mediated talks.
CEOC’s lawyers have said they anticipate Caesars will raise its proposed contribution of $1.5 billion in order to settle claims that it stripped prime assets, such as The Linq Hotel on the Strip.
The junior creditors have timing on their side. They have filed multiple lawsuits against Caesars and one case could go to trial in a Manhattan federal court as soon as May 9. Caesars has said it expects to prevail in that case, but has also warned that losing would plunge it into bankruptcy alongside its operating unit.
Phil Hevener has been writing about the Nevada gaming business for more than 30 years. Email: [email protected].