{"id":34438,"date":"2016-03-16T15:10:55","date_gmt":"2016-03-16T22:10:55","guid":{"rendered":"https:\/\/www.casino.org\/news\/?p=34438"},"modified":"2016-03-16T15:12:19","modified_gmt":"2016-03-16T22:12:19","slug":"caesars-faces-billions-in-claims-investigation-finds-evidence-of-private-equity-asset-stripping","status":"publish","type":"post","link":"https:\/\/www.casino.org\/news\/caesars-faces-billions-in-claims-investigation-finds-evidence-of-private-equity-asset-stripping\/","title":{"rendered":"Caesars Faces Billions in Claims, Investigation Finds Evidence of Private Equity Asset-Stripping \u00a0"},"content":{"rendered":"
\"Caesars
A court-appointed examiner\u2019s report, ironically published on the Ides of March, found evidence of asset-stripping in Caesars bankruptcy reorganization. (Image: g3newswire.com)<\/figcaption><\/figure>\n

Caesars could face billions of dollars in potential damages in relation to its bankruptcy restructuring, according to the recommendations of a court-ordered examiners\u2019 report, published Tuesday.<\/p>\n

The company is seeking chapter 11 bankruptcy for its chief operating unit, CEOC, in an attempt to reorganize $18 billion of its debt, but is facing opposition from its junior creditors.<\/p>\n

Ex-Watergate prosecutor Richard Davis led a team of lawyers which spent a year investigating the casino giant\u2019s corporate dealings.<\/p>\n

Their aim: to determine whether, as alleged, the company fraudulently transferred many of CEOC\u2019s prime assets to Caesars Entertainment<\/a> and other subsidiaries for the benefit of its controlling private equity backers, while placing them out of the reach of the junior creditors.<\/p>\n

This form of asset-stripping left CEOC with nothing but distressed assets and an inability to pay its debts, argues a group of creditors led by the Appaloosa Management hedge fund, which is suing Caesars.<\/p>\n

CEOC Possibly Insolvent as Early as 2008<\/b><\/h2>\n

The investigation team poured over 80 million pages of documents to produce its 80-page report. But ultimately it all boiled down to one word.<\/p>\n

“The simple answer to this question is ‘yes’,” wrote Davis, referring to the allegations.<\/strong><\/p><\/blockquote>\n

The report found that CEOC<\/a> was indeed picked clean of its prize properties for the benefit of its controlling backers, Apollo Global Management\u00a0and TPG Capital, whose leveraged buy-out of the company in 2008 resulted in the industry-high debt load.<\/p>\n

Davis said that sometime in 2012, Apollo and TPG began a strategy to weaken CEOC and strengthen their own hand in the preparation for potential bankruptcy proceedings. He added that CEOC was possibly insolvent as early as 2008, the non-disclosure of which would have amounted to a breach of fiduciary duties to the company\u2019s shareholders.<\/p>\n

“In assessing the actions of [Caesars Entertainment] and the sponsors (TPG and Apollo), it is important to remember that the sponsors are among the most financially savvy investors in the country,” Davis wrote.<\/p>\n

\u201cThere was never any realistic chance that CEOC would ever pay all of its creditors at par through a refinancing of CEOC\u2019s debt or otherwise, and CEC and [Apollo and TPG], in light of their own analyses, could not reasonably have thought differently,\u201d he added.<\/p>\n

Apollo Denial\u00a0<\/b><\/h2>\n

Caesars, however, has branded the report \u201csubjective.\u201d Meanwhile, in an email to Reuters, Apollo Capital management refuted the findings.<\/p>\n

“We believe that Apollo . . . acted appropriately and in good faith to help CEOC strengthen its capital structure,” the company said.<\/strong><\/p><\/blockquote>\n

Davis estimated that potential damages for creditors\u2019 claims on the basis of his findings ranged from $3.6 billion to $5.1 billion.<\/p>\n

Published on March 15, also known as the Ides of March, which was the date on which Julius Caesar was assassinated, the report sent Caesars stock tumbling by 18 percent at the close of trading.<\/p>\n

Et tu, Brute?<\/i><\/p>\n","protected":false},"excerpt":{"rendered":"

Caesars could face billions of dollars in potential damages in relation to its bankruptcy restructuring, according to the recommendations of a court-ordered examiners\u2019 report, published Tuesday. The company is seeking chapter 11 bankruptcy for its chief operating unit, CEOC, in an attempt to reorganize $18 billion of its debt, but is facing opposition from its […]<\/p>\n","protected":false},"author":42,"featured_media":34439,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[10,13,18],"tags":[],"acf":[],"yoast_head":"\nCaesars Faces Billions in Claims, Investigation Finds Evidence of Private Equity Asset-Stripping \u00a0<\/title>\n<meta name=\"description\" content=\"The Caesars bankruptcy investigation suggests Caesars could be on the hook for between $3.6 billion to $5.1 billion.\" \/>\n<meta name=\"robots\" content=\"noindex, follow\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Caesars Faces Billions in Claims, Investigation Finds Evidence of Private Equity Asset-Stripping \u00a0\" \/>\n<meta property=\"og:description\" content=\"The Caesars bankruptcy investigation suggests Caesars could be on the hook for between $3.6 billion to $5.1 billion.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.casino.org\/news\/caesars-faces-billions-in-claims-investigation-finds-evidence-of-private-equity-asset-stripping\/\" \/>\n<meta property=\"og:site_name\" content=\"Casino.org\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/Casino.OrgNews\" \/>\n<meta property=\"article:published_time\" content=\"2016-03-16T22:10:55+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2016-03-16T22:12:19+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2016\/03\/Caesars.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"575\" \/>\n\t<meta property=\"og:image:height\" content=\"418\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Casino.org Staff Writer\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@Casino_Org\" \/>\n<meta name=\"twitter:site\" content=\"@Casino_Org\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Casino.org Staff Writer\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.casino.org\/news\/caesars-faces-billions-in-claims-investigation-finds-evidence-of-private-equity-asset-stripping\/\",\"url\":\"https:\/\/www.casino.org\/news\/caesars-faces-billions-in-claims-investigation-finds-evidence-of-private-equity-asset-stripping\/\",\"name\":\"Caesars Faces Billions in Claims, Investigation Finds Evidence of Private Equity Asset-Stripping \u00a0\",\"isPartOf\":{\"@id\":\"https:\/\/www.casino.org\/news\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/www.casino.org\/news\/caesars-faces-billions-in-claims-investigation-finds-evidence-of-private-equity-asset-stripping\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/www.casino.org\/news\/caesars-faces-billions-in-claims-investigation-finds-evidence-of-private-equity-asset-stripping\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2016\/03\/Caesars.jpg\",\"datePublished\":\"2016-03-16T22:10:55+00:00\",\"dateModified\":\"2016-03-16T22:12:19+00:00\",\"author\":{\"@id\":\"https:\/\/www.casino.org\/news\/#\/schema\/person\/8c48bf89dc86da77b4d856c7b3b78d77\"},\"description\":\"The Caesars bankruptcy investigation suggests Caesars could be on the hook for between $3.6 billion to $5.1 billion.\",\"breadcrumb\":{\"@id\":\"https:\/\/www.casino.org\/news\/caesars-faces-billions-in-claims-investigation-finds-evidence-of-private-equity-asset-stripping\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.casino.org\/news\/caesars-faces-billions-in-claims-investigation-finds-evidence-of-private-equity-asset-stripping\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.casino.org\/news\/caesars-faces-billions-in-claims-investigation-finds-evidence-of-private-equity-asset-stripping\/#primaryimage\",\"url\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2016\/03\/Caesars.jpg\",\"contentUrl\":\"https:\/\/www.casino.org\/news\/wp-content\/uploads\/2016\/03\/Caesars.jpg\",\"width\":575,\"height\":418,\"caption\":\"A court-appointed examiner\u2019s report, ironically published on the Ides of March, found evidence of asset-stripping in Caesars bankruptcy reorganization. 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