I have been reading about the Caesars Bankruptcy case and it's really interesting, but also complex. I am curious to understand better - if someone familiar with it and from a transactional team - could explain a bit the sort of "cooking" the lawyers did on the Asset Transfers (including setting new entities where to transfer some of them) and how (and why) this aspect lead to fraudulent conveyance.
Was it because they were very aggressive, was the way they drafted the agreements, was the intention...? I understand there was a clause that allowed unilaterally the guarantor entity to accept or reject repaying the debt, but if that's the case, how come the opposing lawyers missed it (there were big players in this investment so reputable law firms on both sides were emgaged).
Appreciate it.
Caesars Bankruptcy Forum
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LawDude24
- Posts: 2
- Joined: Wed Feb 21, 2024 2:30 pm
Re: Caesars Bankruptcy
It's been a while since I read Caesars, but I'm very familiar with fraudulent conveyance claims. In a fraudulent conveyance (generally) the debtor gives away something of value to a third party, or sells it at something less than fair market value either while insolvent or rendered insolvent after the transfer. Depending upon the credit agreement in place with the debtor's other creditors, they may or may not get any say on the transaction prior to it occurring - so it is very likely that those creditors, the ones harmed by the fraudulent conveyance, never even saw the transfer/sale agreements and could not approve/disapprove of any funky clause rendering their guarantees less enforceable. After Caesars entered bankruptcy, the estate (i.e. the trustee) is supposed to reclaim, or attempt to reclaim, all fraudulently transferred property. Anything that can be at least be plausibly argued to have been transferred at less than fair market value is fair game for a fraudulent conveyance claim.
