CHICAGO (Reuters) - A lawyer who made his name as a Watergate prosecutor was approved on Wednesday to begin investigating a series of corporate deals in the lead-up to the bankruptcy of the casino operating unit of Caesars Entertainment Corp (CZR.O).
Richard Davis, a former partner at bankruptcy powerhouse Weil Gotshal & Manges, will investigate whether the operating unit received fair value for choice properties including the Linq complex in Las Vegas. Davis was given a wide-ranging role by the judge who tasked him with investigating potential conflicts of interest by the bankrupt unit.
“You’re game for this?” Judge Benjamin Goldgar asked Davis at a hearing in Chicago bankruptcy court, before approving him for the role of examiner. “You’re in.”
Creditors allege the deals looted billions of dollars from the operator of 38 casinos for the benefit of the parent company, which is not bankrupt, and private equity backers Apollo Global Management (APO.N) and TPG Capital.
Separately on Wednesday, Goldgar set a June 1 hearing on Caesars’ request to suspend existing lawsuits filed against certain Caesars entities.
Goldgar said the question of whether to freeze those cases will depend on whether Caesars can convince him that the lawsuits could distract from the operating unit’s bankruptcy restructuring - a “harder argument to make” for a company as big as Caesars, he said.
Davis made his mark early in his career as a member of the Watergate Special Prosecution Force that investigated the administration of President Richard Nixon. Davis was tasked with questioning Nixon about an 18-1/2-minute gap on White House tapes.
He also worked in the U.S. Treasury Department, where he helped negotiate the release of hostages during the Iranian hostage crisis, court records show.
Most recently Davis was tapped to probe the dealings of bankrupt hedge fund Fletcher International, whose founder, Alphonse “Buddy” Fletcher, is the husband of Ellen Pao, the plaintiff in high-profile gender discrimination litigation against venture capital firm Kleiner Perkins Caufield & Byers.
Examiners can dramatically affect a restructuring. Caesars’ creditors have cited the bankruptcy of energy producer Dynegy Holdings, where an examiner’s report spurred the return of assets that had been transferred outside Dynegy’s estate.
Shares of Caesars ended down 4.9 percent at $9.40 on the Nasdaq in a sharply weaker overall market.
The case is Caesars Entertainment Operating Co Inc, U.S. Bankruptcy Court, Northern District of Illinois, No. 15-B-1145
Writing by Tom Hals in Wilmington, Del.; editing by Matthew Lewis