- Former judge is brought on at request of independent directors
- May file Chapter 11 if it loses lawsuit or can't raise money
Caesars Entertainment Corp., the casino operator struggling under a mountain of debt, appointed a chief restructuring officer at the request of its independent directors to aid in negotiations with creditors.
Robert Gerber, a judge in the General Motors bankruptcy, was hired at the request of the Strategic Alternatives Committee, made up of three independent directors at Las Vegas-based Caesars, the company said Friday in a statement.
Since Caesars put its largest unit into bankruptcy, the company has been unable to reach a financial restructuring agreement with creditors. Legal and other professional fees associated with the case have topped $345 million since then, the company said in the statement. Caesars Entertainment Operating Co. filed for Chapter 11 in January 2015.
The company said that if it doesn’t obtain additional sources of cash and if there is an adverse ruling in its ongoing litigation, the parent company may also have to seek bankruptcy court protection.
Caesars, the largest owner of casinos in the U.S., was taken private in a $30.7 billion leveraged buyout led by Apollo Global Management LLC and TPG Capital at the peak of the market in 2008. Creditors have alleged that Caesars stripped them of their collateral to strengthen the company’s hand in negotiations. An independent examiner’s report released last month largely supported their argument.
“Despite a proposal that would provide CEOC and its creditors with value that Caesars Entertainment believes would be more than sufficient to address the findings of the examiner, as well as settle the ongoing guarantee litigation pending against the company, there remains disagreement between the parties, over how to quantify and allocate this value,” board member Fred Kleisner, the chairman of the committee, said in a statement.