Caesars Entertainment has come under massive fire from the Nevada Gaming Commission over its $18 billion bankruptcy fiasco.
The regulator blasted the bankruptcy procedure as “embarrassing” during a commission hearing this week, as it quizzed the company about its controversial reorganization plans.
Caesars is seeking to eliminate billions of debt by putting its major operating unit, Caesars Entertainment Operating Corp (CEOC), though Chapter 11 at the expense of its second-tier creditors.
Caesars took on most of the debt following an ill-timed $32 billion leveraged buy-out in 2008.
The Commission also demanded to know about missing pension payments to a group of former employees and what the company was doing to safeguard the pensions of current employees. Caesars has stopped $33 million worth of payments to 63 now-retired executives and managers, putting many of them who depended on the pension checks into hardship mode.
“Everyone throws the economy under the bus,” complained Commission Chairman Dr. Tony Alamo of the company’s industry-high level of debt. “This is the largest private bankruptcy this state has ever had. How did we get here?… Was this absentee supervision? Was it management? Was it mismanagement?” he demanded.
Commissioner Randolph Townsend said some of the company’s decisions prior to the bankruptcy declaration were “completely perplexing.”
“Can you not build anymore Ferris wheels for a while?” he asked, referring to the recently unfurled and financially disappointing High Roller built at the Linq, to laughter from assembled reporters. Townsend also suggested that some of the pension payments could be funded by Caesars executives “who were paid large bonuses.”
Caesar’s general counsel Tim Donovan said the only pensions affected by the bankruptcy are the 63 already mentioned, as well as those of 340 former executives who signed up for deferred compensation plans.
The latter involves two trust funds, he said, and Caesars is trying to determine if these belong to Caesars Entertainment, the parent company, or CEOC, the bankrupt subsidiary. If it’s the former, the funds are safe. If it’s the latter, though, the pensioners will have to make a claim along with all the other unsecured creditors, picking over the bones of what’s left after the big dogs get paid back.
The 63 pension schemes in question were offered by companies that were then acquired by Harrah’s Entertainment before it became Caesars Entertainment in 2010. “We can’t even find the paperwork for some of them,” Donovan admitted. “These were part of a hodgepodge of acquisition liabilities.”
No doubt comforting words to those affected by the bankruptcy.
200 Lawyers Present at Chapter 11 Hearing
Donovan apologized to the daughter of one of the pensioners, Kenneth Hoang, who had been a host at Caesars Palace for 32 years. She said the company’s behavior towards her father had been “unfair” and “disgusting.”
Caesars told the Gaming Control Board several weeks ago that the Chapter 11 filing was “the largest and most complex bankruptcy in a generation.”
Around 200 bankruptcy lawyers were present at the Chapter 11 hearing this week in Chicago. Where’s Shakespeare when you need him?
“We’re paying for 95 percent of them and not all of them are ours,” complained Donovan.