CHICAGO A lawyer for the U.S. government's
bankruptcy watchdog raised concerns in court on Wednesday over
Caesars Entertainment Corp's $5 billion creditor deal to
push its main unit out of Chapter 11, even as hold-out creditors
appeared closer to backing the agreement.
Caesars Entertainment Operating Co Inc (CEOC) filed for
bankruptcy in January 2015 amid allegations by creditors that
its parent had looted the unit of its best assets, leaving it
with $18 billion of debt.
Las Vegas-based Caesars reached an agreement with creditors
last month that includes a $5 billion contribution to CEOC's
reorganization plan in exchange for releases from billions of
dollars in legal claims.
Even though most of the creditors have agreed to drop their
allegations against Caesars, the U.S. bankruptcy code holds that
any deal must adhere to the law, Denise Delaurent, an attorney
with the U.S. Trustee, said at an Illinois court hearing.
She said her office was reviewing fees and aspects of the
deal that released some parties from lawsuits. "From our
perspective even if everyone comes to an agreement, it might
still violate the law," she said at the hearing.
The U.S. Trustee typically oversees the administration of
bankruptcy cases and polices them for conflicts.
Caesars has denied any wrongdoing.
While the judge handling the Caesars bankruptcy once warned
the contentious case could turn into "World War Three," Caesars
has since made peace with the vast majority of creditors, most
of whom have pledged to support its reorganization plan.
Agreements with two remaining groups - Trilogy Capital
Management and the National Retirement Fund - are close, CEOC's
lawyers said at the hearing on Wednesday.
A trial to confirm the bankruptcy is scheduled for January
and U.S. Bankruptcy Judge Benjamin Goldgar said the
reorganization would likely win court approval if there were not
any objections, which are due later this year.
If the U.S. Trustee disagrees with the confirmation of the
bankruptcy, it could appeal to a higher court.
Caesars declined to comment on Wednesday.