Caesars backs independent bankruptcy examiner to probe transfers

  • Caesars Entertainment operating unit plans to cut $8.6 bln of debt
  • Some creditors accuse company of ‘plundering’ assets
  • Caesars says examiner would confirm transfers were fair

A Monday hearing was postponed due to snow in Chicago, where the Chapter 11 bankruptcy was filed last month.

Caesars’ operating unit plans to cut its debt to $8.6 billion from $18.4 billion. The operator of 38 casinos has blamed a saturated U.S. gambling market and sluggish economic recovery for its financial problems.

Creditors led by the Appaloosa Management hedge fund have said Caesars “plundered” billions of dollars in choice assets from the operating unit, including Planet Hollywood and The Linq in Las Vegas.

The creditors asked for the appointment of an examiner to investigate the operating company’s deals dating back to 2010.

The parent company said in a filing with Chicago’s U.S. Bankruptcy Court that an examiner would confirm the property transfers were fair and that the transfers provided billions of dollars in cash to the operating unit.

While the parent supported an examiner, it also asked the court to give the operating unit and creditors a chance to work out the scope of any investigation.

Bankruptcy examiners can have a dramatic impact on Chapter 11 cases. For example, after power company Dynegy Holdings filed Chapter 11 in 2011 amid allegations of improper asset transfers, a critical examiner’s report helped bring those assets into the bankruptcy estate for the creditors’ benefit.

Caesars was created from the $30 billion leveraged buyout of Harrah’s Entertainment in 2008. That buyout was led by Apollo Global Management and TPG CapitalThe private equity backers continue to control the parent company.

The case is Caesars Entertainment Operating Co Inc, U.S. Bankruptcy Court, Northern District of Illinois. No. 15-01145.