The ongoing restructure of Caesars Entertainment Operating Company (CEOC) $18 billion bankruptcy has been hit with a further setback, following the communication that its mediator has abruptly stepped down from proceedings.
On Friday a Chicago US bankruptcy court filing informed stakeholders that Judge Joseph Farnan who was appointed in March to arbitrate negotiations between CEOC and its creditors had chosen to resign from the case.
Farnan’s handling of the mediation had been criticised by US Bankruptcy Judge Benjamin Goldgar for its severe slow progress and lack of detail and clarity relating to stakeholder concerns.
In his resignation as mediator, Farnan hit back at Goldgar stating that the judge had attached ‘atypical views’ to the bankruptcy case which has been in courts since January 2015. “I’m convinced that I can’t continue and possibly a new mediator will be able to establish a workable process,” Farnan stated.
Seeking to gain some form of progress on the slow moving bankruptcy, in June Judge Goldgar granted CEOC temporary reprieve by halting legal proceedings from multiple bondholders against the company.
At the heart of the litigation are creditor concerns regarding CEOC private equity backers Apollo Global Management and TPG Capital contributions towards the firm’s debt restructuring.
Apollo and TPG have been accused of ‘free riding’ away from CEOC’s collapse, seeking to pay minimum contributions to debt holders.
In July Caesars Entertainment governance offered to contribute $4 billion to the unit’s reorganisation, though junior creditors say they have claims worth $12.6 billion.