Nevada casino regulators scold Caesars for bankruptcy

By Kimberly Pierceall, Associated Press

Thursday, March 26, 2015 | 5:20 p.m.

Nevada gambling regulators called the bankruptcy of Caesars Entertainment Corp.'s debt-heavy subsidiary an embarrassment and lamented the company's inability to pay 63 former executives some $33 million in promised pension payments.

The Nevada Gaming Commission pressed Caesars executives Thursday about the company's overall bankruptcy plan and, particularly, pension and retirement payments owed to current and former employees.

"Everyone throws the economy under the bus," said Chairman Tony Alamo of the explanation Caesars executives provided as to how the company amassed billions of dollars of debt after a badly timed buy-out in 2008. "Was this absentee supervision? Was it management? Was it mismanagement?" he asked, not seeking an answer.

Commissioner Randolph Townsend criticized some of the company's decisions leading up to the subsidiary's bankruptcy as, "completely perplexing."

"Can you not build anymore Ferris wheels for a while?" Townsend asked to chuckles from a crowd in the room, referring to Caesars' year-old 550-foot tall "High Roller" observation wheel on the Strip.

Caesars Entertainment's general counsel Tim Donovan said the only pensions cut off by the bankruptcy so far include 63 former executives and directors who were receiving a supplemental employee retirement plan and 340 former high-ranking employees who were signed up for deferred compensation plans wherein a portion of their salaries would be set aside, not be taxed and saved to be paid out after retirement.

The latter involves two trust funds that the company is still internally attempting to determine if they belong to the bankrupt subsidiary, Caesars Entertainment Operating Corp., or the parent company. If it's the latter, the funds are protected.

If not, the retired executives would have to make a claim for what they're owed like any other unsecured creditor fighting for what's left over after higher ranking creditors are paid back.

Donovan said that of the company's 68,000 or so current employees, some 51,000 are enrolled in intact 401(k) contribution and union-based pension plans. Another 17,000 workers don't participate in the company's 401(k) retirement contribution plan although they're eligible, he said.

The company contributed $15 million to those 401(k) plans a couple of days ago, Caesars Chief Financial Officer Eric Hession told the commission.

Kenneth Ng-Houng (HONG) says he was promised a fully funded pension after working at the company for 32 years, guaranteeing him an annual salary of $71,000 after he retired.

"I would never have to worry for the rest of my life," Houng said the company told him.

Now, he said he relies on Social Security and his daughter Nicole since the January bankruptcy filing.

Donovan apologized to Houng during the presentation to the commission Thursday.

"I understand your issue and I am very sympathetic to your issue," he said.

But, he said, the company couldn't legally make the payments without bankruptcy court permission and Caesars didn't plan to seek. He said lawyers have said it would have little chance of approval since it's not necessary to keep the company's doors open. It might also anger other creditors and damage the company's credibility in court, Donovan said.

Commissioners said they weighed whether they could force the company to make the payments but decided against it to avoid hurting the company's ability to re-emerge from bankruptcy and the jobs of employees.

"I'm stuck in the middle," Alamo said.