May 2015: Victory in Receivership Action Against Caesars Entertainment

The firm obtained a major victory in the Delaware Chancery Court on behalf of the Indenture Trustee for holders of $1.25 billion in notes issued by Caesars Entertainment Operating Company, Inc. (“Caesars”), a leading gaming and resort company. Beginning around 2011, Caesars began transferring billions of dollars in cash, casinos, intellectual property, and other assets to affiliated entities. Caesars was rendered insolvent, and by 2014 was admitting that it would not be able to repay its debts without a major restructuring.

UMB Bank, as Indenture Trustee, retained Quinn Emanuel to vindicate the noteholders’ rights to repayment. On November 25, 2014, UMB filed a 200-page, 400-paragraph complaint cataloging the wrongful conduct of Caesars, its affiliates, and their boards of directors. The complaint alleged fraudulent transfers, breaches of fiduciary duty, and other wrongdoing that stripped valuable assets out of Caesars and the reach of its creditors. In order to stop the asset stripping in its tracks, the firm sought to place Caesars into receivership under Section 291 of Delaware’s General Corporation Law. On December 17, 2014, after accelerated briefing and a contested hearing, the Court handed the firm a major victory by agreeing to expedite the Complaint’s demand for a receiver, effectively giving Caesars a horizon of just a few months before it faced handing over management to court-appointed officials. The pressure exerted by this hard-won ruling paved the way for execution of a Restructuring Support Agreement supported by holders of more than $6 billion.