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Caesars Faces Billions in Claims, Investigation Finds Evidence of Private Equity Asset-Stripping

A court-appointed examiner’s report, ironically published in the Ides of March, discovered evidence of asset-stripping in Caesars bankruptcy reorganization.

Caesars could face huge amounts of dollars in potential damages in relation to its bankruptcy restructuring, based on the recommendations of a examiners that are court-ordered report, posted Tuesday.

The company is searching for chapter 11 bankruptcy because of its primary operating unit, CEOC, in an attempt to reorganize $18 billion of its debt, but is facing opposition from its junior creditors.

Ex-Watergate prosecutor Richard Davis led a team of lawyers which invested a year investigating the casino giant’s corporate dealings.

Their aim: to determine whether, as alleged, the business fraudulently transferred many of CEOC’s prime assets to Caesars Entertainment and other subsidiaries for the advantage of its controlling equity that is private, while placing them out of the reach of the junior creditors.

This form of asset-stripping left CEOC with absolutely nothing but assets that are distressed an inability to pay for its debts, argues a group of creditors led by the Appaloosa Management hedge fund, that will be suing Caesars.

CEOC Possibly Insolvent as Early as 2008

The investigation team poured over 80 million pages of documents to produce its 80-page report. But ultimately it all boiled down seriously to one word.

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