Mostly whimsical reflections on life
Who could ask for better news than a food fight pitting private equity investors against hedge fund managers over a chain of banko casinos.
Casino giant Caesar’s Entertainment is in the dumper for more than $18 billion in debts. Hedge fund creditors filed an involuntary bankruptcy in Delaware and asked a judge to restrict the ability of the private equity investor owners to shift assets under corporate shells.
Private equity investors, whose hope to cash in on an iconic gambling brand came crashing back to earth in the recession, are filing a voluntary bankruptcy in Chicago with the goal of turning their embattled and debt-ridden asset into a real estate investment trust. It appears the private equity investors gambled with and lost the hedge fund managers’ money.
When sophisticated financial sharks like this are at the card table playing legal poker, you need an attorney by your side to follow the action. Or you can skip the details and just sit back and gleefully watch what one commentator called a mud wrestling match between corporate heavyweights.
What makes this mud wrestling match so special is that gamblers won’t have to turn in their chips. Caesar’s casinos will remain open, just waiting to grab your spare cash, preferably around $18 billion.
The big bet on Caesar’s Entertainment was made when gambling profits were on the upswing. Then came the Great Recession, Superstorm Sandy and offshore gambling palaces. Suddenly, there were just lemons on the slots.
One report indicates Caesar’s has posted red ink for the last five years, which runs counter to house rules. But if you hung out in its casinos, you might never have noticed. Caesar’s renovated its casinos, hired headliners and rolled out the red carpet for high rollers. It still was in the hole $2.9 billion in 2013.
Poor returns understandably perturbed hedge fund managers who loaned the private equity investors money to buy Caesar’s Entertainment. Last year, the creditors filed suit, claiming the investor-owners were plundering the best assets of a crumbling empire.
Reportedly there have been lots of negotiations and billable hours by lawyers, accountants and a host of others. Some creditors are on board, but by all appearances, negotiators failed to reach a deal with the most litigious creditors. Now there are dueling bankruptcy cases stretching across two states, with conflicting rules and negating previous legal actions. It’s what common folks would call a “mess.”
The temptation arises to say that such a mess couldn’t happen to a better pair of actors. But, of course, that would be unChristian. The more appropriate view is that it is the revenge of the meek who gambled and lost at poker tables, roulette wheels and slot machines for decades.
Few public tears will be wept in sympathy for the private equity investors and hedge fund managers. No one will lose much sleep if some of these players are forced to slug down only two martinis on their Cayman Island cabanas because of financial losses.
The most fascinating claim in this imbroglio was made by the private equity investors who alleged some disaffected hedge fund manager creditors wanted Caesar’s to collapse “so they could win a wager.”
Maybe it’s time for George Clooney to reassemble his Oceans 11 crew and save the day. It would make a perfect sequel. Snake Eyes seems like the perfect title.