Joel R. Glucksman
Partner
201-896-7095 jglucksman@sh-law.comFirm Insights
US Trustee Nominates Examiner for Caesar's Bankruptcy Proceeding
Author: Joel R. Glucksman
Date: April 7, 2015
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On March 23, a U.S. trustee requested that a judge approve a former Watergate prosecutor to serve as an examiner for Caesar’s Bankruptcy proceedings.
This operating unit of Caesars Entertainment Corp. filed for Chapter 11 bankruptcy protection earlier this year, but only after participating in several transactions that drew substantial scrutiny, according to Reuters.
Need for examiner
Because of these deals, which involved the operating unit switching over the ownership of casinos and other properties to affiliates of its parent company, U.S. Bankruptcy Judge Benjamin Goldgar ruled March 12 that an independent examiner must conduct further inquiry into the agreements, the media outlet reported.
The need to have such an examiner lies in the disputed nature of the transactions, according to the news source. Creditors have alleged that the operating company transferred ownership of its assets so that they would not be able to make good on their claims to these resources. In addition, creditors have alleged these moves violated the law.
Alternatively, Caesars has maintained that the transactions were set up by independent directors and their advisers, The Wall Street Journal reported. In addition, the company contended that the creditors’ allegations lack merit.
Request for examiner
Pursuant to these differing claims, the operating unit of Caesars requested the appointment of an examiner in late February, according to the news source. Because creditors and government officials are usually the ones making these pleas, certain legal experts have perceived the operating unit’s move as atypical.
Under existing bankruptcy code, U.S. trustees with oversight of a particular case can appoint an examiner if there is a possibility of fraud and or misconduct, the media outlet reported. However, bankruptcy lawyers contend that these examiners have contributed to discovering facts in recent years.
- Practices: Corporate Transactions & Business, Bankruptcy & Creditors' Rights, Bankruptcy Litigation
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