LAS VEGAS (AP) — No one said it was going to be easy, and the bankruptcy of Caesars Entertainment's debt-heavy operations arm has been anything but as it appears to be growing even more complex and lengthier than expected.
With some $18 billion in debt and tens of thousands of employees scattered around some 38 hotels and casinos, Caesars Entertainment Operating Co. revealed this week in court filings just how complex the hulking enterprise is: hundreds of legal entities, at least one that has no assets and no liabilities and nearly all owing each other money.
That, on its own, wouldn't necessarily complicate matters.
University of Chicago law professor Anthony Casey said the complexity lies in other matters including ongoing state lawsuits from creditors accusing the company and its parent, Caesars Entertainment Corp., of robbing the operating company of assets by transferring them to other entities and removing a guarantee on their investments.
A court-appointed examiner with no limits on time or budget is expected to investigate the transfers and any conflicts of interest, according to an order from Judge A. Benjamin Goldgar who is hearing the case in Chicago.
"Not all bankruptcy cases have examiners appointed," Casey said. "That could change everything."
So could the ticking clock for deadlines the company needs to meet based on a restructuring plan with its largest creditors, deadlines that may have been pushed up when some creditors forced the company into involuntary bankruptcy in Delaware before the company filed in Chicago on its own, he said.
Despite the pre-arranged restructuring agreement with its first-in-line creditors, "there's still a lot of people at the table hovering around looking for their piece," said Emanuel Grillo, a partner in the bankruptcy practice of Baker Botts which isn't involved in the case and has handled complex corporate Chapter 11 bankruptcies.
Two months in and the company, "hasn't even set the table yet," Grillo said, who described the Caesars case as, "bloodsport." ''This will be a long and ugly one," he said.
And the case is likely to be expensive. Given the infighting and assets involved, Grillo estimated the legal fees could easily pass $100 million.
Caesars is paying its law firm Kirkland & Ellis $170 an hour for a paralegal and up to $1,355 for a partner. After paying a $500,000 retainer in July, Caesars has spent at least $15.7 million since, including another $3 million retainer, according to a February court filing.
The rates are what they are because the case involves, "great complexity, high stakes and severe time pressures," wrote a Caesars official supporting the law firm's employment.
"We would like it to go more quickly than it is going," said another Caesars attorney Steven Pesner in a recent presentation to the Nevada Gaming Control Board. Pesner said there could be a resolution within the calendar year, but if there's litigation, expect longer.
"This is a very complicated bankruptcy," Pesner told the board.
It so far has involved fighting for a venue, negotiating with multiple creditors holding the majority of its debt and numerous lawyers making a flurry of filings. On Tuesday evening alone, thousands of pages of documents were filed with the court detailing the financials of some 140 legal entities affiliated with Caesars Entertainment Operating Co.
Among the complications, 63 former employees are owed nearly $33 million in retirement as part of a supplemental plan the company inherited in earlier acquisitions and stopped paying in January when it filed for bankruptcy, according to court filings.
The daughter of one retired executive hired to attract Asian gamblers urged the judge in a letter filed Wednesday to reinstate her father's pension payments.
"He brought in customers that would come in and lose millions every trip," wrote Nicole Houng of Kenneth Ng-Houng. She criticized the company for making large bonus payouts to executives including outgoing CEO Gary Loveman but ending retirement payments.
At a recent meeting, Nevada Gaming Control Board member Terry Johnson was concerned about the pension payments ending, as first reported by the Las Vegas Review-Journal.
"I've taken them at their word that they're going to investigate how this transpired," he said of Caesars' response that it would look into the payments.