Wednesday, May 20, 2015 | 2 a.m.
Although the Caesars Entertainment bankruptcy is playing out in a Chicago court far from Nevada, it’s still closely connected to Las Vegas, including through one local academic involved in the case.
UNLV law professor Nancy Rapoport was recently appointed to lead a committee that reviews bills for legal work as well as other professional fees and expenses tied to the Caesars bankruptcy proceedings. Rapoport, an expert in bankruptcy law, will thus be a key player as the Las Vegas-based casino giant seeks to restructure one of its divisions in court.
Caesars Entertainment Operating Company filed for Chapter 11 bankruptcy protection in mid-January. The flagship Caesars Palace resort is the only Las Vegas property owned by the bankrupt division. The other Caesars properties on the Strip are controlled by different parts of the company.
Caesars wants to adopt a real estate investment trust setup for the bankrupt division, and it hopes to eliminate about $10 billion in debt through its planned restructuring. But getting there — or to whatever result the case produces — is expected to be a long, drawn-out process.
For starters, not all parties agree about the best path forward. Some Caesars creditors are fighting the company about corporate maneuvers that they say unfairly robbed the bankrupt division of value. A court-appointed examiner is investigating the allegations.
Accordingly, an army of legal professionals is working on the case, which is racking up a sizable stack of bills. That’s where Rapoport comes in.
She’s the chairperson of the fee committee, which consists of five members. Rapoport is the committee’s independent member, a position that court papers say must be held by a “disinterested” person. The other committee members represent various parties with a stake in the case as well as the U.S. Trustee Program, an arm of the Department of Justice that oversees bankruptcies.
Rapoport described her work as helping the court take a “first cut” at determining the reasonableness of professional expenses, such as fees for attorneys and advisers. Those costs can be steep: Rapoport said that in other cases, she’s seen them stretch upward of $75 million to as much as $500 million.
That can make sense, however, considering how much money is involved in the case.
“One of the things that we look at is the ratio of those fees to the overall stuff that’s going on in the Chapter 11,” Rapoport said. “When you put it in the context of how much money is at stake overall, it’s typically pretty proportional. But it’s still a lot of money.”
Although the committee investigates the reasonableness of these fees, the bankruptcy court ultimately decides who does and doesn’t get paid, Rapoport said.
But her duties — for which she plans to enlist the help of UNLV law students and graduates — can save the court a lot of legwork. When she played a similar role in the Station Casinos bankruptcy case, Rapoport said her students and graduates saved the court at least 2,000 hours of time.
This case presents unique challenges for Rapoport because of its innate complications and its jurisdiction.
“The cases I’ve been involved in have been Texas and Nevada cases, so there’s a learning curve here that makes it difficult for me personally, and the complexity of the case is high,” she said. “The principles are the same, but every case presents novel issues that the committee is going have to work though.”
They’ll be working for a while. Rapoport said the committee will meet for as long as the case lasts, which she said won’t be “years and years and years,” but could comfortably be around one year, “depending on how things play out.”