Bankruptcy of Caesars unit racks up $47 million in fees, expenses in about 4 months

Markets Associated Press

The bankruptcy of Caesars Entertainment Corp.'s debt-heavy subsidiary has racked up nearly $47 million in professional fees and expenses in about 4 1/2 months.

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The Associated Press reviewed billings from 18 law firms, financial advisers, consultants and the casino company's creditors between Jan. 15 and May 31, including one from a law firm that noted it cost $16,367 to prepare its own bill. Another firm's invoice includes billing for a paralegal who earned $133,490 in that time.

And that's with discounts, in several cases.

In filing for bankruptcy in mid-January, Caesars Entertainment Operating Co. has been trying to shed about $10 billion of its $18.4 billion in debt. But the complex case has already involved fights over picking a court, the timing of its filing, brokering a deal with different creditors and fending off litigation from some of them at the same time.

The company is due in Chicago bankruptcy court on Wednesday for what could be a pivotal ruling that would either halt lawsuits against the subsidiary's parent company, Caesars Entertainment Corp., or let the litigation proceed, potentially imperiling that company's finances, too.

On Monday, Caesars Entertainment Operating Co. announced that it had brokered an agreement to get second-lien creditors on board with its restructuring plan, but it needs at least half of the creditors to sign on.

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All the legal-wrangling has meant more experts and lawyers being paid for more hours, including the time to travel to and from hearings. The bankrupt company is on the hook for all of the expenses after a court-appointed fee committee reviews them and the court approves them.

"It's gotten to that number faster than I would have even expected," said Emmanuel Grillo, a partner in the bankruptcy practice of Baker Botts who in March predicted the cost would easily pass $100 million. His firm isn't involved in the case, but it has handled complex corporate Chapter 11 bankruptcies.

To put Caesar's pace of bankruptcy-related bills in context, the massive Lehman Brothers bankruptcy produced a $1.6 billion bill for fees during its 4 1/2 years in court. The Tribune Co. bankruptcy cost nearly $500 million in fees.

Looking at every request, from $20 worth of tips or $480 in parking to thousands of dollars for airfare and lodging, is the fee committee led by Nancy Rapoport with the William S. Boyd School of Law at the University of Nevada, Las Vegas and a team of students.

The court has said there won't be any reimbursement for local meals or local travel. In many cases, the professionals have volunteered to discount their billings by 10 or 20 percent.

"It's a lot of money," Rapoport said of the amount so far. But too soon to tell if it's any more than any other complex bankruptcy, she said.

Rapoport also said some of the costs may have stacked up even if the company hadn't filed for bankruptcy. It still needs to make regular securities filings, for example.

"That doesn't stop while you're in bankruptcy," she said.

It's not unusual to see massive billings like the more than 1,900 pages submitted by the company's lead attorney Kirkland & Ellis in cases like these because professionals are billing in tenths of an hour, Rapoport said.

At a hearing in late March, more than 200 interested parties — the majority of them lawyers and legal aides — packed into a Chicago federal building's largest courtroom where the case was moved to accommodate the sheer number of participants. The wood-paneled 25th-floor room is typically used for ceremonies swearing in judges and new American citizens. It has also been used for especially high-profile hearings, including the 2011 sentencing of former Illinois Gov. Rod Blagojevich for trying to sell President Obama's vacated U.S. Senate seat.

At the Caesars hearing, attorneys filing the gallery benches sat with filings piled up on their laps, many scribbling notes.

U.S. District Judge Benjamin Goldgar sought to dissuade lawyers from filing unnecessary documents in the case, telling those gathered at that hearing he and his staff are already buried reading printouts in his chambers. "I will tell you I have never seen so much paper in my life," he said.

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Associated Press reporter Michael Tarm in Chicago contributed to this report.