%1

The legal bill for Caesars Entertainment Operating Co.’s year-and-a-half-long battle with creditors has come in at $301.3 million, the Wall Street Journal reported today. The casino company disclosed the cost in a bankruptcy court filing on Friday, days after announcing a settlement that will bring peace to the $18 billion restructuring. The fees and expenses, which Caesars paid between the date of its Jan. 15, 2015, bankruptcy filing through Aug. 31, 2016, have gone to the roughly two dozen law, investment-banking, consulting and other professional firms on its chapter 11 payroll. The chapter 11 case of CEOC, the operating unit of Caesars Entertainment Corp., has been a battle from the start, when a group of junior bondholders, including hedge funds Appaloosa Management LP and Oaktree Capital Management LP, sought to force CEOC into involuntary bankruptcy.

A divided federal appeals court on Monday rejected claims by Detroit retirees that their pensions were unfairly cut to help the city end the largest U.S. municipal bankruptcy, Reuters reported today. The U.S. Court of Appeals for the Sixth Circuit in Cincinnati said that restoring the pension cuts would "unavoidably" unravel Detroit's reorganization plan, which helped the city shed $7 billion of debt and end its 17-month bankruptcy in December 2014. "The harm to the city and its dependents — employees and stakeholders, agencies and businesses, and 685,000 residents — so outweighs the harm to these appellants that granting their requested relief and unraveling the plan would be impractical, imprudent, and therefore inequitable," Circuit Judge Alice Batchelder wrote in the opinion.

A U.S. judge has ordered a former luxury real estate mogul to pay $286 million to the creditors of a Montana club for the ultrarich that he is accused of fleecing for personal gain before driving it into bankruptcy, the Associated Press reported yesterday. The order on Wednesday from U.S. Bankruptcy Judge Ralph Kirscher is the latest turn in a yearslong hunt for assets of Timothy Blixseth, the founder of the Yellowstone Club, a private ski and golf resort near Big Sky with an elite group of members including Microsoft co-founder Bill Gates. Blixseth diverted hundreds of millions of dollars from a 2005 Credit Suisse loan to the club, using the money to buy jets, yachts and luxury properties around the globe. His ex-wife received the club as part of their divorce settlement in 2008 and it went bankrupt within months after its huge liabilities were uncovered. The club later emerged from bankruptcy under new ownership. Blixseth is now representing himself in the case and said in a court filing last week that blame for the club's bankruptcy should be shared by Credit Suisse, which he claimed unfairly enticed him into accepting a reckless loan. Judge Kirscher agreed with that claim in 2010, when he issued a reduced, $41 million judgment against Blixseth. But the Ninth Circuit Court of Appeals reversed that ruling in July, saying Credit Suisse's wrongdoing paled against Blixseth's and he should have to relinquish his "ill-gotten gains."

A group of current and former Hilton Hotels Corp. executives accuse the hotel giant of failing to pay $4.7 million in retirement benefits it allegedly owes as part of its relationship with Caesars Entertainment Corp. (Boyle v. Hilton Hotels Corp., D. Nev., No. 2:16-cv-02250), Bloomberg’s Pension & Benefits Daily reported yesterday. The lawsuit, filed on Monday in the U.S. District Court for the District of Nevada, brings attention to the 1998 spin-off of Hilton’s gaming division — formerly known as Park Place Entertainment Corp. — which later changed its name to Caesars. After Caesars filed for bankruptcy last year, Hilton sued the gaming company for its alleged failure to pay at least $17.7 million in contributions to a pension fund for former Hilton employees. The case was settled this summer in the bankruptcy court.

The U.S. Supreme Court yesterday rejected a request by Lynn Tilton, the New York financier accused by the Securities and Exchange Commission of defrauding investors, to put on hold an SEC enforcement action as she challenges the agency's in-house judicial proceeding against her, Reuters reported. The Court's action means that Tilton will face an Oct. 24 hearing before an SEC administrative law judge over whether she and her firm, Patriarch Partners, hid the poor performance of assets underlying her Zohar collateralized loan obligation funds, and collected nearly $200 million in improper fees. Tilton has said that SEC administrative proceedings are unfair to defendants like her, and that the means by which presiding judges are appointed violates the U.S. Constitution. In a June ruling, the New York-based U.S. Court of Appeals for the Second Circuit rejected her challenge to the process, saying it was premature because the SEC had not finished its administrative case, and thus the court where she sued lacked jurisdiction. Tilton and Patriarch sued the SEC again in Manhattan federal court on Sept. 9, seeking to prevent the commission from pursuing in-house enforcement actions.

As Peabody Energy Inc. stumbled toward bankruptcy last year, its Wall Street adviser raised a red flag for management: Two powerful and litigious distressed-debt hedge funds held Peabody bonds, Bloomberg News reported today. “Both are bomb throwers and we should be very suspicious,” wrote Tyler Cowan, a restructuring expert at Lazard Ltd. Six months later, in April, the world’s largest private-sector coal company was in bankruptcy. The two New York hedge funds — Paul Singer’s Elliott Management Corp. and Mark Brodsky’s Aurelius Capital Management — soon became embroiled in a bitter $1 billion dispute as they sought to extract a bigger share of Peabody’s assets. In court filings, including emails and handwritten notes by Peabody executives, Elliott and Aurelius are shown to have privately lobbied management to make the accounting change that would shift $1 billion in collateral to benefit themselves and other holders of around $4 billion in unsecured bonds. The lenders led by Citigroup Inc., an agent to $2.8 billion in secured debt, contend that those assets rightly belong to them. Peabody caved to the demands of the hedge funds in their effort to “drive up their own recovery at the expense” of the secured creditors, Citibank says in court filings. Franklin Resources Inc., with 21 percent of one tranche of the debt, is among the biggest secured lenders.

Apollo Global Management and TPG Capital will give up most of their stake in Caesars Entertainment to help it emerge from chapter 11 protection, the New York Times reported today. The complicated agreement, announced yesterday, settles a long-running battle between the private equity firms and a host of creditors. Under the terms of the deal, Apollo and TPG will hand over their $950 million stake in Caesars Entertainment’s parent company, which is publicly traded and not in bankruptcy protection. (They will retain a smaller stake in Caesars Entertainment through their holdings in another affiliate.) More senior creditors will also give up some of what they are owed. Over all, creditors will own 70 percent of Caesars when it emerges from chapter 11 protection. Shareholders in the still-public parent company will own 6 percent in the newly reorganized company.