CHICAGO Nov 21 The U.S. government's bankruptcy
watchdog objected on Monday to a Caesars Entertainment Corp
subsidiary's proposal to exit Chapter 11, threatening to
derail a largely consensual plan to slash $10 billion of debt.
The Caesars subsidiary, Caesars Entertainment Operating Co
Inc (CEOC), filed an $18 billion bankruptcy in January 2015 amid
allegations by creditors that its private equity-backed parent
had looted the unit of its best assets and stripped debt
Feuding parties made a peace deal in September that included
a $5 billion contribution by Caesars to the unit's
reorganization plan in exchange for releases from billions of
dollars in potential legal claims.
In a filing with the U.S. Bankruptcy Court in Chicago, the
U.S. Trustee objected to the releases and the exculpation of "a
wide array of parties for acts far beyond the plan or the
Chapter 11 cases." The U.S. Trustee called the releases "blanket
A report by an independent examiner in March said that
Caesars and its private equity backers Apollo Global Management
LLC and TPG Capital Management LP could be on
the hook for up to $5.1 billion in damages for the alleged
Caesars, Apollo and TPG have denied any wrongdoing.
The U.S. Trustee, which oversees the administration of
bankruptcy cases, also criticized the legal releases as too
broad for shielding against willful misconduct or actual fraud.
Caesars did not immediately reply to a request for comment
A trial to confirm the bankruptcy is scheduled in Chicago
If the U.S. Trustee disagrees with the confirmation of the
bankruptcy, it could appeal to a higher court.
Apollo and TPG formed Caesars through the $30 billion
leveraged buyout of Harrah's Entertainment in 2008, just before
the U.S economy tipped into recession.
Under the proposed reorganization plan, CEOC will be split
into a real estate investment trust controlled by lenders and a
separate operating company that will form part of a new
restructured Caesars controlled by creditors.
Apollo and TPG will still own a 16 percent collective stake
in the new restructured Caesars.
(Reporting by Tracy Rucinski; Editing by Cynthia Osterman)