Joel R. Glucksman
Partner
201-896-7095 jglucksman@sh-law.comFederal Judge Declares Examiner Must Look Into Caesars Asset Transfers
Author: Joel R. Glucksman|March 24, 2015
A U.S. bankruptcy judge decided March 12 that an independent examiner must investigate transactions that involve one of Caesars Entertainment Corp’s operating units.
Federal Judge Declares Examiner Must Look Into Caesars Asset Transfers
A U.S. bankruptcy judge decided March 12 that an independent examiner must investigate transactions that involve one of Caesars Entertainment Corp’s operating units.
Earlier this year, Caesars Entertainment Operating Co. filed for Chapter 11 bankruptcy protection, but before taking this legal action, it participated in several intercompany deals, according to Reuters. Before the company filed to obtain protection from its creditors, it switched ownership of many of its casinos and other valuable assets to affiliates of its parent company.
This did not sit well with its creditors. According to them, Caesars Entertainment Corp. transferred these assets illegally, in an attempt to insulate them from the demands of its creditors and to benefit Apollo Global Management and TPG Capital Management, the private equity firms that own them, the media outlet reported. On March 12, U.S. Bankruptcy Judge Benjamin Goldgar stated that the examiner must look into “any apparent self-dealing or conflicts of interest involving the debtors or their affiliates.”
Both Caesars Entertainment Corp. and its operating unit currently face four lawsuits, according to The Wall Street Journal. While these legal claims are slightly different, they all share the common allegation that the two companies moved assets around to benefit the organizations owning them, which came at the expense of resources that could go to pay creditors’ claims.
In an effort to get the lawsuits dismissed, the two defendants have contended that if the legal action continues, it will greatly reduce the ability of the entertainment company and its operating unit to pay creditors, the media outlet reported.
More specifically, it was stated that “it would be nearly impossible for CEC to provide any substantial contribution to a reorganization, including the $1.5 billion that it has agreed to contribute,” according to the news source.
The examiner, to be appointed by the U.S. Trustee, will be responsible for evaluating several intercompany deals, Reuters reported. Currently, creditors are disputing the transfer of the Octavius Tower in Las Vegas during 2013, the exchange of the operating unit’s stake in online gaming businesses in 2011 and the transfer of several casinos during 2014.
Federal Judge Declares Examiner Must Look Into Caesars Asset Transfers
Author: Joel R. Glucksman
Earlier this year, Caesars Entertainment Operating Co. filed for Chapter 11 bankruptcy protection, but before taking this legal action, it participated in several intercompany deals, according to Reuters. Before the company filed to obtain protection from its creditors, it switched ownership of many of its casinos and other valuable assets to affiliates of its parent company.
This did not sit well with its creditors. According to them, Caesars Entertainment Corp. transferred these assets illegally, in an attempt to insulate them from the demands of its creditors and to benefit Apollo Global Management and TPG Capital Management, the private equity firms that own them, the media outlet reported. On March 12, U.S. Bankruptcy Judge Benjamin Goldgar stated that the examiner must look into “any apparent self-dealing or conflicts of interest involving the debtors or their affiliates.”
Both Caesars Entertainment Corp. and its operating unit currently face four lawsuits, according to The Wall Street Journal. While these legal claims are slightly different, they all share the common allegation that the two companies moved assets around to benefit the organizations owning them, which came at the expense of resources that could go to pay creditors’ claims.
In an effort to get the lawsuits dismissed, the two defendants have contended that if the legal action continues, it will greatly reduce the ability of the entertainment company and its operating unit to pay creditors, the media outlet reported.
More specifically, it was stated that “it would be nearly impossible for CEC to provide any substantial contribution to a reorganization, including the $1.5 billion that it has agreed to contribute,” according to the news source.
The examiner, to be appointed by the U.S. Trustee, will be responsible for evaluating several intercompany deals, Reuters reported. Currently, creditors are disputing the transfer of the Octavius Tower in Las Vegas during 2013, the exchange of the operating unit’s stake in online gaming businesses in 2011 and the transfer of several casinos during 2014.
