Caesars Entertainment Corporation (Nasdaq: CZR) last week announced that its Board has appointed the Honorable Robert E. Gerber as Chief Restructuring Officer. The appointment came at the recommendation of Caesars Entertainment's independent director committee, the Strategic Alternatives Committee. Judge Gerber will report to this Committee and help it carry out its responsibilities, including advising on a potential restructuring of Caesars Entertainment if the Company cannot resolve its differences with Caesars Entertainment Operating Company, Inc. ("CEOC") and its creditors with regard to CEOC's restructuring and related litigation against Caesars Entertainment, or if other factors make a potential restructuring of Caesars Entertainment advisable.
"Caesars Entertainment has offered substantial value to CEOC in an effort to end the protracted and expensive bankruptcy proceedings of CEOC," said Fred Kleisner, Chairman of the Strategic Alternatives Committee. "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."
Caesars Entertainment believes that Judge Gerber will be instrumental in assisting the Strategic Alternatives Committee in its efforts. Judge Gerber has extensive experience with large and complex bankruptcy proceedings. He was a United States Bankruptcy Judge for the Southern District of New York for more than 15 years, presiding over a wide variety of complex Chapter 11, Chapter 15, Section 304 and SIPA cases — including 10 with over $1 billion in debt. Judge Gerber was named as one of the nation's outstanding bankruptcy judges six times. Prior to that, he practiced with Fried, Frank, Harris, Shriver & Jacobson in New York, specializing in securities and commercial litigation and, thereafter, bankruptcy litigation and counseling.
Caesars Entertainment's Strategic Alternatives Committee is presently comprised of three independent directors, is advised by its own legal and financial advisors and is charged with exploring, evaluating and reviewing potential strategic alternatives and contingency planning for Caesars Entertainment as it relates to the ongoing bankruptcy proceedings of CEOC and the related litigation pending against Caesars Entertainment. The Committee also oversees the Company's involvement in CEOC's bankruptcy proceedings.
Since the commencement of CEOC's bankruptcy, Caesars Entertainment and its affiliates have spent in excess of $345 millionon legal and professional fees associated with the restructuring. In its first-quarter earnings report Thursday, in which management announced record operating results, Caesars Entertainment noted that while the cash forecast at the Company currently contemplates liquidity to be sufficient through the end of the year, Caesars Entertainment's cash balance will be consumed by expenses associated with the CEOC restructuring unless it identifies additional sources of liquidity to meet ongoing obligations as well as to meet its commitments to support the CEOC restructuring. As noted in the earnings report, if Caesars Entertainment is unable to obtain additional sources of cash when needed, in the event of a material adverse ruling on one or all of our ongoing litigation matters, or if CEOC does not emerge from bankruptcy on a timely basis on terms and under circumstances satisfactory to Caesars Entertainment, it is likely that Caesars Entertainment would seek reorganization under Chapter 11 of the Bankruptcy Code.
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