Caesar’s Palace has long been one of the most iconic destinations on the Las Vegas strip so the fact that Caesars Entertainment Operating Co Inc (CEOC) is in the middle of bankruptcy mediation is a bit surprising. Or rather, that the company is still figuring out out how to resolve this $18 billion bankruptcy case.
But perhaps this case continues to drag out because of various random complexities that continue to complicate the case. The CEOC had originally filed for bankruptcy in January of 2015 in light of creditor accusations that its parent company Caesars Entertainment Corp (CZR.O) and the private equity sponsors Apollo Global Management LLC (APO.N) and TPG Capital (TPG.UL) had stripped the company of all its best assets.
As such, in March, retired US Judge Joseph Farnan was brought on to mediate the feud in hopes of reaching a settlement that would eventually pull CEOC out of this bankruptcy. However, Farnan has stepped down as mediator.
“I have truly enjoyed working with the various constituencies involved with the effort of reorganizing the companies,” he wrote, in a letter filed on Friday. “However, recent events have convinced me that I am unable to continue the mediation process.”
While he said, also in the letter, that his resignation is not intended “to fault or criticize” any party associated with the case, he also made sure to draw attention to something he called an “atypical view” of the mediation process.
Farnan goes on to say, “I believe the Court either misspoke or doesn’t understand how such disclosures would be viewed by participants and the markets.”
Apparently, he has long been disappointed that a bankruptcy judge found some issues with a recent progress report that—according to said judge—did not detail enough the mediated discussions and proposals.
While many are criticizing this move—or have, at least, expressed great concern—Temple University law professor Jonathan C Lipson comments, “Farnan is known to be an evenhanded person. I never heard of a mediator resigning due to statements or conduct by the judge in the case.”
Similarly, lawyer and California federal court mediator Benjamin S. Seigel, notes that while it is somewhat unusual for a mediator to simply quit like this, he could understand the move if it was a matter of revealing anything from the discussions.
He explains: “One of the basic tenets of mediation is confidentiality. It’s like Vegas—what you say here stays here.”