Capital Allocators – Inside the Institutional Investment Industry Max Frumes and Sujeet Indap –Inside the Sausage Factory of the Caesar's Restructuring (Capital Allocators, EP.209)
Aug 16, 2021
Max Frumes and Sujeet Indap, seasoned financial journalists and co-authors of "The Caesars Palace Coup," delve into the tumultuous bankruptcy of Caesars Entertainment. They reveal the intricate negotiations among top hedge funds and creditors, shedding light on the power dynamics at play. The duo discusses the blend of luck and skill in distressed investing, offering lessons for investors navigating similar waters. They also reflect on their journey from finance to journalism and share insights on the ethical shifts within the investment landscape.
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Involuntary Bankruptcy
- Junior creditors, feeling sidelined, filed an involuntary bankruptcy petition against Caesars two days before the company's planned filing.
- This led to a split-screen bankruptcy hearing in Chicago and Delaware, with the Delaware judge ultimately siding with Caesars.
Competing Forces in Bankruptcy
- Caesars bankruptcy presented two competing forces: quick restructuring versus resolving fraudulent conveyance claims.
- Apollo aimed to restructure quickly and maintain control, while junior creditors sought to investigate the asset transfers.
Power Dynamics in Restructuring
- Size and power influence out-of-court restructurings, where larger players can impose their will.
- In bankruptcy court, a judge's focus on legal equities can empower smaller players, altering power dynamics.
