UNITED STATES BANKRUPTCY COURT 

NORTHERN DISTRICT OF ILLINOIS 

EASTERN DIVISION 

CAESARS ENTERTAINMENT OPERATING 

COMPANY, INC.; CAESARS LICENSE COMPANY, 

LLC; OCTAVIUS LINQ HOLDING CO., LLC; PHW 

LAS VEGAS, LLC; CAESARS BALTIMORE 

ACQUISITION COMPANY, LLC; PHW MANAGER, 

LLC; CAESARS BALTIMORE MANAGEMENT 

COMPANY, LLC; 3535 LV CORP; 3535 LV 

PARENT, LLC; CORNER INVESTMENT COMPANY 

NEWCO, LLC; JCC HOLDING COMPANY II 

NEWCO, LLC; PARBALL CORPORATION; 

PARBALL PARENT, LLC; CROMWELL 

MANAGER, LLC; BALLY’S LAS VEGAS 

MANAGER, LLC; THE QUAD MANAGER, LLC; 

FHR CORPORATION; FHR PARENT, LLC; LVH 

CORPORATION; LVH PARENT, LLC; FLAMINGOLAUGHLIN, INC; FLAMINGO-LAUGHLIN 

PARENT, LLC; DCH EXCHANGE LLC; LAS 

VEGAS RESORT DEVELOPMENT INC.; WINNICK 

HOLDINGS LLC; and TRB FLAMINGO LLC, 

Plaintiffs, 

vs. 

CAESARS ENTERTAINMENT CORPORATION; 

CAESARS ACQUISITION COMPANY; CAESARS 

GROWTH PARTNERS, LLC; CAESARS 

ENTERTAINMENT RESORT PROPERTIES, LLC; 

CAESARS ENTERPRISE SERVICES, LLC; 

CAESARS INTERACTIVE ENTERTAINMENT, 

INC.; APOLLO GLOBAL MANAGEMENT, LLC; 

TPG CAPITAL, LP; HAMLET HOLDINGS LLC; 

TPG HAMLET HOLDINGS, LLC; TPG HAMLET 

HOLDINGS B, LLC; APOLLO HAMLET 

HOLDINGS, LLC; APOLLO HAMLET HOLDINGS 

B, LLC; CO-INVEST HAMLET HOLDINGS, SERIES 

LLC; CO-INVEST HAMLET HOLDINGS B, LLC; 

JEFFREY BENJAMIN; DAVID BONDERMAN; 

KELVIN L. DAVIS; JEFFREY HOUSENBOLD; 

FRED J. KLEISNER; GARY W. LOVEMAN; KARL 

PETERSON; ERIC PRESS; MARC C. ROWAN; 

DAVID B. SAMBUR; LYNN SWANN; 

CHRISTOPHER WILLIAMS; CHATHAM ASSET 

MANAGEMENT LLC; 3535 LV NEWCO, LLC; 

 Adv. Proc. No. 16-____ 

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BALLY’S LV, LLC; CAESARS GROWTH BALLY’S 

LV, LLC; CAESARS GROWTH BALTIMORE FEE, 

LLC; CAESARS GROWTH CROMWELL, LLC; 

CAESARS GROWTH HARRAH’S NEW ORLEANS, 

LLC; CAESARS GROWTH LAUNDRY, LLC; 

CAESARS GROWTH PH, LLC; CAESARS GROWTH 

PH FEE, LLC; CAESARS GROWTH QUAD, LLC; 

CAESARS LINQ, LLC; CAESARS TOURNAMENT, 

LLC; CORNER INVESTMENT COMPANY, LLC; 

FLAMINGO CERP MANAGER, LLC; FLAMINGO 

LAS VEGAS OPERATING COMPANY, LLC; 

FLAMINGO LAS VEGAS PROPCO, LLC; HAC 

CERP MANAGER, LLC; HARRAH’S ATLANTIC 

CITY OPERATING COMPANY LLC; HARRAH’S 

ATLANTIC CITY PROPCO, LLC; HARRAH’S LAS 

VEGAS, LLC; HARRAH’S LAS VEGAS PROPCO, 

LLC; HARRAH’S LAUGHLIN PROPCO, LLC; 

HARRAH’S LAUGHLIN, LLC; HIE HOLDINGS, 

INC.; HIE HOLDINGS TOPCO, INC.; HLV CERP 

MANAGER, LLC; LAUGHLIN CERP MANAGER, 

LLC; PARBALL NEWCO, LLC; PARIS CERP 

MANAGER, LLC; PARIS LAS VEGAS OPERATING 

COMPANY, LLC; PARIS LAS VEGAS PROPCO, 

LLC; PHWLV, LLC; RIO CERP MANAGER, LLC; 

RIO PROPCO, LLC; RIO PROPERTIES, LLC; JAZZ 

CASINO COMPANY, LLC; LAUNDRY NEWCO, 

LLC; LVH NEWCO, LLC; FLAMINGO-LAUGHLIN 

NEWCO, LLC; AND FHR NEWCO, LLC, 

Defendants. 

 

ADVERSARY COMPLAINT 

Plaintiffs Caesars Entertainment Operating Company, Inc. (“CEOC”) and certain of its 

debtor subsidiaries bring this Adversary Complaint, on information and belief where applicable, 

against CEOC’s controlling shareholder, Caesars Entertainment Corporation (“CEC”); several of 

CEOC’s present and past directors and officers; several of CEC’s present and past directors and 

officers; Caesars Acquisition Company; Caesars Growth Partners, LLC; Caesars Entertainment 

Resort Properties, LLC; Caesars Enterprise Services, LLC; Caesars Interactive Entertainment, 

Inc.; Apollo Global Management, LLC; TPG Capital, LP; Hamlet Holdings LLC and certain of 

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its affiliates; Chatham Asset Management LLC; and affiliates of CEC that were transferees of 

assets fraudulently transferred from CEOC for (a) recovery of fraudulent transfers and the return 

to CEOC and its subsidiaries of valuable assets that were wrongly taken from them by the 

actions of CEOC’s directors, its controlling shareholder, and others, (b) monetary damages 

and/or rescission for breaches of fiduciary duties, unjust enrichment, aiding and abetting 

breaches of fiduciary duties, civil conspiracy, misappropriation of corporate opportunity, and 

waste of corporate assets, and (c) imposition of a constructive trust or equitable lien over the 

transferred assets. 

INTRODUCTION 

1. This action arises from a series of self-dealing transactions between CEOC and its 

debtor subsidiaries (collectively, the “Debtors”) and entities controlled by or under common 

control with CEC. Each of these transactions involved transfers that were made for inadequate 

consideration and less than reasonably equivalent value at a time when the transferor was 

insolvent, and that were made with the intent to hinder or delay CEOC’s creditors. These 

transactions were conceived, crafted, and implemented by Apollo Global Management, 

TPG Capital, CEC, and individuals and agents connected with these entities. The transactions 

were effectuated through a series of complex agreements that enabled Apollo, TPG and CEC to 

gain control of CEOC’s high-growth assets, unencumbered by CEOC debt, and to remove those 

assets beyond the reach of CEOC’s creditors. Later, CEC and defendants who were also CEOC 

directors filed a lawsuit seeking declaratory relief sanctioning these asset transfers and insulating 

CEC, Apollo, TPG, and their affiliates from fraudulent transfer claims and other legal liabilities. 

2. In January 2008, Apollo and TPG, using a vehicle called Hamlet Holdings LLC 

and affiliated entities (collectively, “Hamlet”), acquired the company then known as Harrah’s 

Entertainment Inc.—and now known as CEC—in a highly leveraged $30.7 billion buyout (the 

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“LBO”). Through Hamlet, Apollo and TPG (with Hamlet, the “Sponsors”) continue to own 60% 

of the common stock of CEC and controlled all aspects of CEOC’s governance and operations 

prior to June 2014. 

3. At the time of the LBO, Harrah’s operated primarily through a wholly-owned 

subsidiary then known as Harrah’s Operating Company, Inc.—now known as CEOC—and it 

was this operating company that incurred most of the debt used to fund the LBO.1 Harrah’s 

owned and operated a network of casinos in regional markets throughout the country. It also 

owned a significant number of casinos in destination markets—at that time, primarily Las Vegas 

and New Orleans. 

4. Harrah’s used its customer loyalty program to encourage customers in its regional 

markets to give Harrah’s a greater share of their local gaming “spend” to earn more reward 

credits to use at other Harrah’s properties, particularly Harrah’s destination properties in 

Las Vegas and New Orleans. Many of these regional casinos were only modestly profitable in 

their own right, but they provided Harrah’s with the critical ability to interact and deepen 

relationships with customers in their home markets. Harrah’s portfolio of regional and 

destination properties created a hub-and-spoke business model that let the company capture 

customers on a regional basis and feed them to its destination properties. 

5. Harrah’s also developed synergies within Las Vegas. Through various 

acquisitions preceding the LBO, Harrah’s developed a dominant and concentrated presence in 

the center of the Las Vegas Strip, including properties such as Caesars Palace, Paris Las Vegas, 

Bally’s Las Vegas, The Flamingo Las Vegas, Rio Las Vegas, The Cromwell (formerly Bill’s 

 

1

 For purposes of simplicity, Plaintiffs sometimes refer to the collective operations of CEC and 

its subsidiaries as “Caesars” and, where appropriate, refer to the two Harrah’s entities by 

their Caesars names.

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Gambling Hall & Saloon), Harrah’s Las Vegas, and The Quad Resort & Casino (then known as 

the Imperial Palace), as well as parcels of undeveloped land near the Las Vegas Strip. Control of 

these contiguous casinos, hotels, restaurants, and entertainment locations was intended to ensure 

that, once brought to Las Vegas, Harrah’s customers would remain within the Harrah’s system. 

6. In 1998, Harrah’s hired Harvard Business School professor Gary Loveman to 

refine, develop, and expand Harrah’s customer loyalty program. That program, known as Total 

Rewards, pioneered the use of data analytics and behavioral tracking to maximize play and 

profitability throughout the Harrah’s casino network. As a result of Loveman’s innovative 

approach and the success of Total Rewards, Harrah’s became one of the premier operators of 

casino properties in the world. Loveman was promoted to Harrah’s Chief Executive Officer in 

2003. 

7. Within months of the LBO, the global financial crisis and ensuing recession 

crippled the gaming industry. CEOC was especially hard hit as the revenues needed to service 

its massive debt fell short. At first, CEOC and the Sponsors responded to CEOC’s unsustainable 

capital structure with exchange offers for CEOC’s distressed debt and with credit facility 

amendments, which reduced some of CEOC’s indebtedness and extended the maturity of much 

of the rest. 

8. Soon, though, the Sponsors and CEC realized that CEOC would never be able to 

repay its enormous debt and embarked upon a new strategy. Beginning in 2009, the Sponsors 

and CEC devised a plan to salvage their multibillion-dollar investment in CEC by stripping 

CEOC of valuable assets and moving them to affiliates of CEC that the Sponsors and CEC 

controlled and which were not liable for CEOC’s massive debts. In implementing this plan, the 

Sponsors’ role went beyond mere governance and supervision of CEC and CEOC. Instead, 

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partners and officers from those firms—in particular, Apollo—played an active role in the 

day-to-day management of CEOC, in determining the specifics of CEOC’s corporate strategy, in 

choosing which assets would be transferred, in deciding which CEC affiliates would receive the 

assets, in selecting CEOC’s financial and legal advisors prior to June 2014, in negotiating for 

(and, simultaneously, against) CEOC, and in determining the prices to be paid for assets. Often 

this was done with little evident input from the management of CEOC itself, who were relegated 

to staffing the strategic initiatives the Sponsors, CEC, and their advisors devised. 

9. In the course of these transfers, the Sponsors, CEC, and their advisors created a 

profusion of affiliates, holding companies, intermediate entities, and special purpose vehicles. In 

2009, they created an affiliate named Harrah’s Interactive Entertainment—now known as 

Caesars Interactive Entertainment (“CIE”)—which was owned by two layers of holding 

companies, each with multiple classes of stock. In 2013, they created Caesars Entertainment 

Resort Properties, LLC (“CERP”) which, with various affiliated entities, took ownership of six 

existing properties indirectly owned by CEC (the “CMBS Properties”) and two CEOC 

properties. Also in 2013, the Sponsors, CEC, and their advisors created an entity called Caesars 

Acquisition Company and a subsidiary, Caesars Growth Partners, to receive the transfer of 

properties from CEOC. In 2014, they created a “services company” called Caesars Enterprise 

Services, which, among other things, took control of CEOC’s Total Rewards program, its 

enterprise services (including most of its employee workforce built over many years, and 

predating the LBO), and its property management business. Each of these affiliates was directly 

or indirectly controlled by CEC and the Sponsors, and each was created for the purpose of or in 

connection with transferring assets beyond the reach of CEOC’s creditors. In fact, in some 

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cases, the Sponsors and CEC openly characterized these affiliates as “bankruptcy remote”; that 

is, remote from the CEOC bankruptcy they knew was coming. 

10. In May 2009, the Sponsors and CEC engineered the transfer of CEOC’s online 

gaming business, including CEOC’s World Series of Poker trademarks and intellectual property 

rights, to Caesars Interactive Entertainment. In August 2010, the Sponsors and CEC ordered 

CEOC to transfer its intellectual property rights in the CMBS Properties to CEC affiliates that 

managed those properties and, later, to transfer those rights to CERP. In September 2011, CEC 

and the Sponsors forced CEOC to sell CIE its rights to hold World Series of Poker tournaments. 

In October 2013, CEC and the Sponsors caused CEOC to convey two of CEOC’s significant 

Las Vegas properties to CERP. The next month, CEOC was instructed to transfer two other 

valuable properties to Growth Partners, along with valuable management fee streams. In March 

2014, the Sponsors and CEC engineered CEOC’s sale of four of its most important remaining 

properties to Growth Partners, along with valuable management fee streams and 31 acres of 

undeveloped land. As part of that same transaction, CEOC transferred its rights in Total 

Rewards to a CES—a vehicle controlled by CERP and Growth Partners. 

11. In mid-2014, the Sponsors and CEC announced a number of further initiatives 

designed to enrich CEC and the Sponsors at the expense of CEOC and its creditors. In May 

2014, the Sponsors orchestrated what they described as a sale of 5% of CEOC’s common stock 

in an attempt to extricate CEC from its guarantee of CEOC’s bond debt. Also in May 2014, the 

Sponsors and CEC launched a tender offer for CEOC’s 5.625% Senior Notes due June 2015 and 

10% Second Priority Notes due 2015. Although those notes had been trading at a significant 

discount to their face value, the Sponsors and CEC had CEOC spend over $1 billion to redeem 

them at par, plus a premium, plus accrued interest, largely from Growth Partners and a hedge 

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fund that on information and belief had been cooperating with Apollo. A few weeks later, the 

Sponsors ordered CEOC to repay all amounts remaining under an intercompany revolver facility 

between CEC and CEOC, exhausting another $261.8 million of CEOC’s dwindling cash. In 

June 2014, the Sponsors and CEC caused CEOC to announce the closure of its modestly 

profitable Showboat Atlantic City property and to direct its VIP customers to a casino owned by 

CERP. In August 2014, the Sponsors, CEC, and CEOC filed a lawsuit in New York seeking a 

declaratory judgment that none of their fraudulent transfers and other acts had been illegal. 

12. The Sponsors and CEC’s strategy had several purposes. The first was to move 

CEOC’s most valuable assets into new entities that would be insulated from CEOC’s inevitable 

bankruptcy and improve the otherwise dismal prospects for the Sponsors’ investment in CEC. 

The net effect was to divide Caesars’ business into two segments: one a “Good Caesars,” 

consisting of CIE, Growth Partners, CERP, and CES, that owned and controlled the prime assets 

formerly belonging to CEOC; the other, a “Bad Caesars,” consisting of CEOC, which remains 

burdened by substantial debt and whose remaining properties consist primarily of regional 

casinos. Only the “Bad Caesars” remains liable for the vast majority of the debts incurred in the 

2008 LBO. 

13. But there also was a second, and equally crucial, objective: once the principal 

benefits of the synergies of the Caesars’ network of properties and control of the Total Rewards 

customer loyalty program had been transferred to the Sponsors and CEC, CEOC’s remaining 

regional assets would have greatly reduced value to any potential third-party purchaser. And by 

severing CEOC from its assets and from the core enterprise functions that it previously 

performed, the Sponsors and CEC were able to create certain risks to CEOC’s ability to 

formulate a plan of reorganization (in addition to structural issues that already existed) that 

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would allow CEOC to emerge from chapter 11 as a standalone entity. Thus, when the 

long-expected bankruptcy came, the Sponsors and CEC hoped to acquire cheaply the assets that 

remained in CEOC and recreate the synergistic Caesars network without CEOC’s troublesome 

debt.2

14. This second objective was, in essence, the willful destruction of CEOC’s value. 

Ordinarily, such efforts would have been prevented by CEOC’s board, which owed fiduciary 

duties to the company. Because CEOC was insolvent, these duties required CEOC’s board to 

maximize the value of CEOC. CEOC’s board, however, at the time was completely dominated 

by CEC and the Sponsors. At most times, it consisted of only two directors, both of whom were 

officers or directors of CEC and neither of whom was independent. In fact, CEOC had no 

independent directors until June 2014. In addition, CEOC did not have, and was not afforded, 

separate legal counsel or financial advisors to advise it on the transfers; CEOC’s board did not 

create special committees of disinterested directors to assess the proposed transfers; there was no 

market process to ensure that CEOC received reasonably equivalent value for the assets it 

transferred; and, in virtually all cases, the board did not ask for or receive independent fairness 

opinions. 

15. A third objective—admitted by the Sponsors—was to strengthen the Sponsors’ 

hand in restructuring negotiations with CEOC’s creditors. With CEOC’s valuable assets stripped 

from CEOC and now firmly under the Sponsors’ control, the Sponsors would enjoy leverage in 

their negotiations with creditors with respect to a CEOC restructuring. If creditors balked at a 

 

2

 CEC subsequently agreed to a new-value bankruptcy plan where it proposed to buy CEOC’s assets for a 

contribution of at least $1.5 billion. See CEOC 8-K filed on Dec. 31, 2014. Almost simultaneously, CEC 

announced its plans to merge with Caesars Acquisition Corporation, thus recapturing the properties CEOC had 

transferred to Growth Partners. See CEC 8-K filed on December 22, 2014. As part of the proposed plan, the 

Sponsors proposed that CEOC would grant all persons and entities involved in the transfers general releases 

from any claims CEOC might have against them. 

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restructuring, the Sponsors would have nonetheless created—in their words—a “war chest” to 

use against the creditors in CEOC’s inevitable bankruptcy. 

* * * 

16. Because the consideration received by CEOC for these transfers was wholly 

inadequate and because the transfers were intended to enrich CEC and the Sponsors at the 

expense of CEOC and its creditors, the transfers were unlawful and avoidable. 

17. In addition, the transfers were made with actual intent to hinder, delay or defraud 

CEOC’s creditors and thus the transfers should be avoided or the value of the property 

transferred must be returned to CEOC. Defendants also are liable for monetary damages for 

their role in these transactions. 

18. CEC, as CEOC’s controlling shareholder, CEC’s directors (by virtue of their 

domination over CEOC and its board), and CEOC’s directors and officers owed fiduciary duties 

to CEOC. Because CEOC was insolvent at all relevant times, these defendants had a duty to 

maximize CEOC’s value. Defendants breached their fiduciary duties or aided and abetted others 

in breaching fiduciary duties, and are therefore liable for damages to CEOC. 

19. The conduct of the defendants named in this lawsuit has already been the subject 

of a comprehensive investigation conducted by a court-appointed examiner, Richard Davis (the 

“Examiner”). As summarized by the Examiner at the outset of his 930-page report: 

The principal question being investigated was whether in structuring and 

implementing these transactions assets were removed from CEOC to the 

detriment of CEOC and its creditors. 

The simple answer to this question is “yes.” As a result, claims of varying 

strength arise out of these transactions for constructive fraudulent transfers, actual 

fraudulent transfers (based on intent to hinder or delay creditors) and breaches of 

fiduciary duty by CEOC directors and officers and CEC. Aiding and abetting 

breach of fiduciary duty claims, again of varying strength, exist against the 

Sponsors and certain of CEC’s directors. 

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The Examiner concluded that “[t]he potential damages from those claims considered reasonable 

or strong range from $3.6 billion to $5.1 billion.” The Examiner defined “strong” claims as 

those “having a high likelihood of success” and “reasonable” claims as those “having a 

reasonable, or better than 50/50, chance of success.” That range of potential damages excluded 

other claims that were characterized by the Examiner as viable, albeit with a less than a 50/50 

chance of success. Nor did the Examiner’s range include certain types of damages that the 

Examiner determined may be available on strong and reasonable claims, but that the Examiner 

did not quantify. Many of the allegations and claims set forth in this Complaint are based on the 

Examiner’s comprehensive investigation. 

JURISDICTION AND VENUE 

20. This Court has subject matter jurisdiction over the claims for relief in this 

adversary proceeding pursuant to 28 U.S.C. § 1334(b). 

21. Venue for this adversary proceeding properly lies in this judicial district pursuant 

to 28 U.S.C. § 1409. 

PARTIES 

A. Plaintiffs 

22. Plaintiff Caesars Entertainment Operating Company, Inc. (“CEOC”) is a 

Delaware corporation that owns, operates, and manages casinos and other entertainment 

properties in Las Vegas and elsewhere in the United States. CEOC’s headquarters are located at 

One Caesars Palace Drive, Las Vegas, Nevada 89109. 

23. Plaintiff Caesars License Company, LLC (“CLC”) (f/k/a Harrah’s License 

Company, LLC) is a wholly owned subsidiary of CEOC that owned certain intellectual property 

that was transferred or licensed through the transactions set forth in this Complaint. 

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24. Plaintiff Octavius Linq Holding Co., LLC is a wholly owned subsidiary of CEOC 

that owned the equity of Octavius Linq Intermediate Holding Co., which in turn owned Octavius 

Tower, Linq Retail, RDE Casino and the Observation Wheel, and certain undeveloped land, 

which were transferred through the transactions set forth in this Complaint. 

25. Plaintiff PHW Las Vegas, LLC is a wholly owned subsidiary of CEOC that 

owned the equity of Planet Hollywood Las Vegas, which was transferred through the 

transactions set forth in this Complaint. 

26. Plaintiff Caesars Baltimore Acquisition Company, LLC is a wholly owned 

subsidiary of CEOC that owned CEOC’s interests in Caesars Baltimore Investment Co., LLC, 

which were transferred through the transactions set forth in this Complaint. 

27. Plaintiff PHW Manager, LLC is a wholly owned subsidiary of CEOC that owned 

CEOC’s interests in management fees generated from Planet Hollywood Las Vegas, a portion of 

which were transferred through the transactions set forth in this Complaint. 

28. Plaintiff Caesars Baltimore Management Company, LLC is a wholly owned 

subsidiary of CEOC that owned CEOC’s interests in management fees generated from 

Horseshoe Baltimore, a portion of which were transferred through the transactions set forth in 

this Complaint. 

29. Plaintiff 3535 LV Corp. is a wholly owned subsidiary of CEOC that owned 

certain undeveloped land, which was transferred through the transactions set forth in this 

Complaint. 

30. Plaintiff 3535 LV Parent, LLC is a wholly owned subsidiary of CEOC that owned 

CEOC’s interests in 3535 LV NewCo, LLC and certain undeveloped land, which were 

transferred through the transactions set forth in this Complaint. 

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31. Plaintiff Corner Investment Company Newco, LLC is a wholly owned subsidiary 

of CEOC that owned CEOC’s interests in Corner Investment Company, LLC, which were 

transferred through the transactions set forth in this Complaint. 

32. Plaintiff JCC Holding Company II NewCo, LLC is a wholly owned subsidiary of 

CEOC that owned CEOC’s interests in JCC Holding Company III, LLC, which were transferred 

through the transactions set forth in this Complaint. 

33. Plaintiff Parball Parent, LLC (together with its subsidiaries) is a wholly owned 

subsidiary of CEOC that owned CEOC’s interests in Parball NewCo, LLC and certain 

undeveloped land, which were transferred through the transactions set forth in this Complaint. 

34. Plaintiff Parball Corporation (together with its subsidiaries) is a wholly owned 

subsidiary of CEOC that owned certain undeveloped land, which was transferred through the 

transactions set forth in this Complaint. 

35. Plaintiff Cromwell Manager, LLC is a wholly owned subsidiary of CEOC that 

owned CEOC’s interests in certain management fees, a portion of which were transferred 

through the transactions set forth in this Complaint. 

36. Plaintiff Bally’s Las Vegas Manager, LLC is a wholly owned subsidiary of CEOC 

that owned CEOC’s interests in certain management fees, a portion of which were transferred 

through the transactions set forth in this Complaint. 

37. Plaintiff The Quad Manager, LLC is a wholly owned subsidiary of CEOC that 

owned CEOC’s interests in certain management fees, a portion of which were transferred 

through the transactions set forth in this Complaint. 

38. Plaintiff FHR Corporation is a wholly owned subsidiary of CEOC that owned 

certain CEOC assets that were transferred through the transactions set forth in this Complaint. 

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39. Plaintiff FHR Parent, LLC is a wholly owned subsidiary of CEOC that owned 

certain CEOC assets that were transferred through the transactions set forth in this Complaint. 

40. Plaintiff LVH Corporation is a wholly owned subsidiary of CEOC that owned 

certain CEOC assets that were transferred through the transactions set forth in this Complaint. 

41. Plaintiff LVH Parent, LLC is a wholly owned subsidiary of CEOC that owned 

certain CEOC assets that were transferred through the transactions set forth in this Complaint. 

42. Plaintiff Flamingo-Laughlin, Inc. is a wholly owned subsidiary of CEOC that 

owned certain CEOC assets that were transferred through the transactions set forth in this 

Complaint. 

43. Plaintiff Flamingo-Laughlin Parent, LLC is a wholly owned subsidiary of CEOC 

that owned certain CEOC assets that were transferred through the transactions set forth in this 

Complaint. 

44. Plaintiff DCH Exchange LLC is a wholly owned subsidiary of CEOC that 

provided easements on certain parcels of land as set forth in this Complaint. 

45. Plaintiff Las Vegas Resort Development Inc. is a wholly owned subsidiary of 

CEOC that provided easements on certain parcels of land as set forth in this Complaint. 

46. Plaintiff Winnick Holdings LLC is a wholly owned subsidiary of CEOC that 

provided easements on certain parcels of land as set forth in this Complaint. 

47. Plaintiff TRB Flamingo LLC is a wholly owned subsidiary of CEOC that 

provided easements on certain parcels of land as set forth in this Complaint. 

B. Corporate Defendants 

48. Defendant Caesars Entertainment Corporation (“CEC”) is a Delaware corporation 

that, through subsidiaries, joint ventures, and other arrangements, owns, operates, and manages 

gambling casinos and properties in the United States and foreign countries. CEC’s offices are 

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located at One Caesars Palace Drive, Las Vegas, Nevada. The Sponsors own approximately 

60% of the voting stock of CEC and have the right to appoint CEC’s entire board of directors. 

49. Defendant Caesars Acquisition Company (“CAC”) is a Delaware corporation 

CEC formed in 2013 to make an equity investment in Growth Partners. CAC is a public 

company whose stock is listed and traded on NASDAQ. 66% of the voting stock of CAC is 

owned by affiliates of the Sponsors. The Sponsors also control CAC pursuant to an Omnibus 

Voting Agreement that gives them the right to appoint CAC’s entire board of directors. CAC’s 

offices are located at One Caesars Palace Drive, Las Vegas, Nevada. 

50. Defendant Caesars Growth Partners, LLC (“Growth Partners”) is a Delaware 

limited liability company that was formed in 2013 as a joint venture between CEC and CAC to 

acquire assets from CEOC and CEC. All of the voting units of Growth Partners are owned by 

CAC. All of the non-voting units of Growth Partners are owned by CEC or its subsidiaries and 

affiliates. Upon information and belief, Growth Partners’ offices are located at 

One Caesars Palace Drive, Las Vegas, Nevada.3

51. Defendant Caesars Entertainment Resort Properties, LLC (“CERP”) is a Delaware 

limited liability company that was formed in October 2013 as a wholly-owned subsidiary of CEC 

for the purpose of acquiring, holding, and operating certain Caesars properties. CERP’s offices 

are located at One Caesars Palace Drive, Las Vegas, Nevada.4

 

 

3

 For purposes of this Complaint, Growth Partners is defined to include all of the direct and 

indirect subsidiaries, affiliates, holding companies, and other entities owned by, controlled 

by, or under common ownership or control with Growth Partners that received assets or 

ownership interests in conjunction with any of the relevant transfers.

4

 For purposes of this Complaint, CERP is defined to include all of the direct and indirect 

subsidiaries, affiliates, holding companies, and other entities owned by, controlled by, or 

under common ownership or control with CERP that received assets or ownership interests in 

conjunction with any of the relevant transfers.

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52. Defendant Caesars Enterprise Services, LLC (“CES”) is a Delaware limited 

liability company that was formed on April 4, 2014, for the purpose of acquiring and managing 

the enterprise-wide assets of CEOC for the benefit of CEC, CEOC, Growth Partners, and CERP. 

Upon information and belief, CEC’s offices are located at One Caesars Palace Drive, Las Vegas, 

Nevada. 

53. Defendant Caesars Interactive Entertainment, Inc. (“CIE”) is a Delaware 

corporation formed in April 2009 by CEC. CIE operates an online gaming business that includes 

so-called “play for fun” games as well as “real money” games in certain jurisdictions. In 

addition, CIE owns the World Series of Poker tournaments and brand. The majority of the 

voting stock of CIE is owned by Growth Partners. Upon information and belief, CIE’s offices 

are located at 1411 Peel, Montreal, Canada. 

54. The following chart illustrates the Caesars organizational structure following the 

creation of Growth Partners and CERP in 2013, the transfer by CEC of 11% of its equity stake in 

CEOC beginning in May 2014, and the creation of CES: 

55. CEC, CEOC, CERP, CAC, and Growth Partners have created and do business 

through dozens of direct and indirect subsidiaries, affiliates, holding companies, and other 

entities, all of which are owned or controlled by these companies or by the Sponsors. CEC, 

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CEOC, CERP, CAC, and Growth Partners frequently create new such entities, or abandon older 

ones, to conceal the nature or details of transfers or other improper purposes. Because these 

entities are owned, controlled, and dominated by the Sponsors, CEC, CEOC, CERP, CAC, or 

Growth Partners, and have been used for improper purposes, their independent identities should 

be disregarded and they should be treated as alter egos of their ultimate owners. 

56. Defendant Apollo Global Management, LLC is a Delaware limited liability 

company formed on July 3, 2007. Apollo’s global headquarters are located at 

9 West 57th Street, New York, New York. For purposes of this Complaint, Apollo is defined to 

include all of its funds, subsidiaries, or vehicles that have invested in CEC or any of its affiliates. 

57. Defendant TPG Capital, LP is a Delaware limited partnership formed on 

November 15, 2011. Upon information and belief, TPG’s global headquarters are located at 

345 California Street, San Francisco, California. For purposes of this Complaint, TPG is defined 

to include all of its funds and/or subsidiaries that invested in CEC or any of its affiliates. 

58. Defendant Hamlet Holdings LLC is a Delaware limited liability company. Upon 

information and belief, Hamlet Holdings LLC was formed in 2002 and is headquartered in Fort 

Worth, Texas. Hamlet Holdings LLC and its affiliates, including Defendants Apollo Hamlet 

Holdings, LLC, Apollo Hamlet Holdings B, LLC, TPG Hamlet Holdings, LLC, TPG Hamlet 

Holdings B, LLC, Co-Invest Hamlet Holdings, Series LLC, and Co-Invest Hamlet Holdings B, 

LLC (collectively with Hamlet Holdings LLC, “Hamlet”), are the vehicles by which the 

Sponsors raised money to invest in and execute the LBO, control CEC, and invest in and control 

CAC. According to SEC filings, Hamlet Holdings LLC’s members consist of five persons from 

Apollo and TPG. The Sponsors, together with investment vehicles they created, at all relevant 

times owned approximately 60% of the voting common stock of CEC and 66% of the voting 

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common stock of CAC. According to SEC filings, Apollo and TPG gave an irrevocable proxy to 

defendant Hamlet Holdings LLC under which Hamlet Holdings LLC has sole voting and sole 

dispositive power with respect to these shares of CEC and CAC. 

C. Individual Defendants 

59. Defendant Jeffrey Benjamin was at all relevant times a director of CEC and a 

senior advisor to Apollo. Upon information and belief, Benjamin stood to benefit personally 

from some or all of the transactions described in this Complaint. 

60. Defendant David Bonderman was at all relevant times a director of CEC and is 

currently a director of CEOC. Bonderman is a founding partner of TPG and, upon information 

and belief, stood to benefit personally from some or all of the transactions described in this 

Complaint. 

61. Defendant Kelvin L. Davis was at all relevant times a director of CEC and is 

currently a director of CEOC. Davis is a senior partner of TPG and, upon information and belief, 

stood to benefit personally from some or all of the transactions described in this Complaint. 

62. Defendant Jeffrey Housenbold was a CEC director from December 2011 to 

March 2014 and, upon information and belief, stood to benefit personally from some or all of the 

transactions described in this Complaint. 

63. Defendant Fred J. Kleisner became a CEC director in July 2013. Upon 

information and belief, Kleisner stood to benefit personally from some or all of the transactions 

described in this Complaint. 

64. Defendant Gary Loveman was at all relevant times the Chairman and a director of 

CEC and CEOC. Loveman also was the Chief Executive Officer and President of CEC and 

CEOC until June 30, 2015. Upon information and belief, Loveman stood to benefit personally 

from some or all of the transactions described in this Complaint. 

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65. Defendant Karl Peterson was at all relevant times a partner at TPG and from 2008 

until July 2013 a director of CEC. Upon information and belief, Peterson stood to benefit 

personally from some or all of the transactions described in this Complaint. 

66. Defendant Eric Press was at all relevant times a director of CEC and a partner at 

Apollo. Upon information and belief, Press stood to benefit personally from some or all of the 

transactions described in this Complaint. 

67. Defendant Marc C. Rowan was at all relevant times a director of CEC and from 

June 2014 to March 2016 was a director of CEOC. Rowan is a founding partner of Apollo and, 

upon information and belief, stood to benefit personally from some or all of the transactions 

described in this Complaint. 

68. Defendant David B. Sambur has been a director of CEC since 2010 and a director 

of CEOC since June 2014. Sambur is a partner of Apollo and, upon information and belief, 

stood to benefit personally from some or all of the transactions described in this Complaint. 

69. Defendant Lynn Swann was at all relevant times a director of CEC and, upon 

information and belief, stood to benefit personally from some or all of the transactions described 

in this Complaint. 

70. Defendant Christopher Williams was at all relevant times a director of CEC and, 

upon information and belief, stood to benefit personally from some or all of the transactions 

described in this Complaint. 

71. According to CEC’s proxy statements, CEC does not consider Messrs. Loveman, 

Bonderman, Davis, Rowan, Sambur, Benjamin, Peterson, and Press to be independent directors 

because of their relationships with affiliates of the Sponsors or other relationships with CEC. 

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D. Other Defendants 

72. Defendant Chatham Asset Management LLC is an asset management company 

with its principal place of business at 26 Main Street, Chatham Township, New Jersey. Chatham 

is a limited liability company organized under the laws of Delaware. 

E. Transferee Defendants 

73. In addition to CIE, CEC, CERP, CAC, and Growth Partners, the Sponsors and 

CEC formed numerous entities that received transfers of real property, tangible and personal 

property, intellectual property, and other assets from CEOC and from affiliates of CEOC. Upon 

information and belief and unless otherwise indicated, the offices and premises of each of these 

defendants are located at the same Las Vegas address as CEC. 

74. The “2009 Transferees” are the entities that received assets and the business that 

CEOC transferred from its online gaming business. These include the following defendants: 

a. CEC and CIE; 

b. HIE Holdings Topco, Inc., a Delaware corporation; 

c. HIE Holdings, Inc., a Delaware corporation; 

d. Caesars Tournament, LLC, a Delaware limited liability company; and 

e. Rio Properties, LLC, a Nevada limited liability company. 

75. The “CMBS PropCos” are the entities that received assets that CEOC transferred 

in 2010 as a result of the CMBS Loan Agreement Amendment and Trademarks Transfer. These 

include the following defendants: 

a. CEC; 

b. Rio PropCo, LLC, a Delaware limited liability company; 

c. Harrah’s Las Vegas PropCo, LLC, a Delaware limited liability company; 

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d. Harrah’s Atlantic City PropCo, LLC, a Delaware limited liability 

company; 

e. Harrah’s Laughlin PropCo, LLC, a Delaware limited liability company; 

f. Flamingo Las Vegas Propco, LLC, a Delaware limited liability company; 

and 

g. Paris Las Vegas PropCo, LLC, a Delaware limited liability company. 

76. The “WSOP Transaction Transferees” are the entities that received assets that 

CEOC transferred in 2011 as a result of the WSOP Transaction. These include the following 

defendants: 

a. CEC; 

b. CIE; 

c. Caesars Tournament, LLC; and 

d. Rio Properties, LLC. 

77. The “Linq/Octavius Transferees” are the entities that received assets that CEOC 

transferred in 2013 as a result of the Linq and Octavius transfers. These include defendants CEC 

and Rio Properties, LLC. 

78. The “2013 Transferees” are the entities that received assets CEOC transferred in 

2013 as a result of the 2013 Transaction Agreement. These include the following defendants: 

a. CEC, CAC, and Growth Partners; 

b. Caesars Growth PH Fee, LLC, a Delaware limited liability company; 

c. Caesars Growth Baltimore Fee, LLC, a Delaware limited liability 

company; 

d. PHWLV, LLC, a Nevada limited liability company; and 

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e. Caesars Growth PH, LLC, a Delaware limited liability company. 

79. The “Services Transferees” are the entities that received management services 

from CEOC and access to CEOC’s Total Rewards program pursuant to the 2010 Shared Services 

Agreement, the 2013 Shared Services Agreement, and the Management Services Agreements. 

These include the following defendants: 

a. CMBS PropCos, CEC, CERP, and Growth Partners; 

b. Flamingo Las Vegas Operating Company, LLC, a Nevada limited liability 

company; 

c. Paris Las Vegas Operating Company, LLC, a Nevada limited liability 

company; 

d. Harrah’s Laughlin, LLC, a Nevada limited liability company; 

e. Rio CERP Manager, LLC, a Nevada limited liability company; 

f. Paris CERP Manager, LLC, a Nevada limited liability company; 

g. Laughlin CERP Manager, LLC, a Nevada limited liability company; 

h. HLV CERP Manager, LLC, a Nevada limited liability company; 

i. HAC CERP Manager, LLC, a New Jersey limited liability company; 

j. Harrah’s Las Vegas, LLC, a Nevada limited liability company; 

k. Flamingo CERP Manager, LLC, a Nevada limited liability company; 

l. 3535 LV Newco, LLC, a Delaware limited liability company; 

m. Parball NewCo, LLC, a Delaware limited liability company; 

n. Corner Investment Company, LLC, a Nevada limited liability company; 

and 

o. Jazz Casino Company, LLC, a Louisiana limited liability company. 

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80. The “2014 Transferees” are the entities that received properties from CEOC as a 

result of the 2014 Transaction Agreement. These include the following defendants: 

a. CEC, CAC, Growth Partners, 3535 LV Newco, LLC, Parball NewCo, 

LLC, and Corner Investment Company, LLC; 

b. Caesars Growth Bally’s LV, LLC, a Delaware limited liability company; 

c. Caesars Growth Quad, LLC, a Delaware limited liability company; 

d. Caesars Growth Cromwell, LLC, a Delaware limited liability company; 

e. Caesars Growth Harrah’s New Orleans, LLC, a Delaware limited liability 

company; 

f. Caesars Linq, LLC, a Delaware limited liability company; 

g. Caesars Growth Laundry, LLC, a Delaware limited liability company; 

h. FHR NewCo, LLC, a Delaware limited liability company; 

i. Flamingo-Laughlin NewCo, LLC, a Delaware limited liability company; 

j. LVH NewCo, LLC, a Delaware limited liability company; and 

k. Laundry NewCo, LLC, a Delaware limited liability company. 

81. The “Easement Transferees” are the entities that were granted easements in 2011 

on four lots of unimproved real estate, comprising approximately 25.8 acres, directly east of 

various Caesars properties. These include the following defendants: 

a. Flamingo Las Vegas Propco, LLC and Caesars Linq, LLC, each of whom 

is identified above; and 

b. 3535 LV Corp. (formerly known as Harrah’s Imperial Palace 

Corporation), a Nevada corporation (which is not named as a defendant as 

it subsequently transferred its interests in the Quad to Growth Partners). 

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82. The “Total Rewards Transferees” are the entities that received access to or rights 

in Total Rewards as a result of the 2014 Transaction Agreement and the formation of CES. 

These include the following defendants: 

a. CEC, CERP, Growth Partners, and CES; 

b. Caesars Growth Bally’s LV LLC, a Delaware company; 

c. Flamingo Las Vegas Operating Company, LLC; 

d. Harrah’s Las Vegas, LLC; 

e. Harrah’s Laughlin, LLC; 

f. Paris Las Vegas Operating Company, LLC; 

g. Rio CERP Manager, LLC; 

h. Paris CERP Manager, LLC; 

i. Laughlin CERP Manager, LLC; 

j. HLV CERP Manager, LLC; 

k. HAC CERP Manager, LLC; and 

l. Flamingo CERP Manager, LLC. 

BACKGROUND 

A. THE CAESARS ENTITIES 

83. In January 2008, the Sponsors acquired CEC in a $30.7 billion leveraged buyout. 

The acquisition was financed with approximately $24 billion of new debt. More than two thirds 

of this new debt was issued by CEOC (at the time, Harrah’s Entertainment Operating Company). 

Most of the debt issued by CEOC was also guaranteed by CEC. The Sponsors and other 

investors also contributed approximately $6.1 billion in cash, and the balance of the LBO was 

funded through other borrowings. 

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84. From 2008 until at least 2013, CEOC was CEC’s principal operating subsidiary. 

At all relevant times, CEOC has been completely dominated and controlled by CEC. Until May 

2014, CEC owned all of CEOC’s stock. It continues to own at least 89% of CEOC’s stock 

today. CEOC also did not have any independent directors until June 2014. 

85. Before the transfers described in this Complaint, CEOC owned and operated five 

of Caesars’ nine highly profitable casinos in Las Vegas,5 five casinos on the east coast and 17 

casinos elsewhere in the United States. In addition, CEOC owned or managed 20 other casinos 

in the United States and in other countries. 

86. The Sponsors’ leveraged buyout of CEC closed approximately six months before 

the onset of the financial crisis in 2008. The financial crisis and ensuing recession seriously 

damaged CEOC’s business, especially among its regional casinos. From year-end 2007 to 

year-end 2009, enterprise-wide net revenues decreased from $12.7 billion to $10.3 billion and 

adjusted EBITDA decreased from $2.1 billion to $1.7 billion. Indeed, the only properties that 

have generated material positive operating income and operating margins in recent years have 

been CEOC’s five casinos in Las Vegas and its casino in New Orleans, all but one of which have 

since been transferred to entities under CEC’s control. The following chart shows, by region, 

CEOC’s net revenues: 

 

5

 CEOC also has owned a tenth Caesars property, named Hot Spot, in Las Vegas that offers 

limited gaming. However, Hot Spot is so small (1,000 square feet containing fifteen slot 

machines, and no table games) that Caesars has not considered it to be a “casino.”

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The “Other U.S.” region includes Harrah’s New Orleans, which is considered a “super regional” 

and has been transferred to Growth. 

B. CEOC WAS INSOLVENT AT ALL RELEVANT TIMES 

87. CEOC has been insolvent for a number of years dating back to at least 

December 31, 2008, and possibly earlier. CEOC fails every test of solvency. First, the fair 

market value of CEOC’s assets has been substantially less than its liabilities. Since 2008, the 

face amount of CEOC’s interest-bearing debt (excluding intercompany debt) has not been less 

than $17.3 billion. During this same period, the value of CEOC’s enterprise was substantially 

less, resulting in a negative equity value. 

88. Throughout the 2008 to 2014 time period, CEOC’s balance sheet consistently 

reflected negative equity, meaning the book value of its liabilities exceeded the book value of its 

assets. This deficit increased substantially if goodwill were excluded from the calculation of 

CEOC’s assets. In addition, over this period, CEOC took financial reporting impairment charges 

on various assets, which reduced the carrying value of CEOC’s assets by over $4.8 billion. 

89. Second, CEOC fails both the cash flow and capital adequacy tests for solvency. 

CEOC has had a cash flow deficit each year since 2008. During this time, CEOC failed to 

generate sufficient operating cash flow to pay its operating expenses. One reason for CEOC’s 

cash flow deficit—although by no means the only reason—has been its debt service obligations 

from the 2008 LBO. CEOC is the issuer of $19.7 billion of CEC’s overall debt, and it had debt 

service obligations in 2014 of just under $2 billion. 

90. CEOC’s statements of cash flows throughout this time period also consistently 

reported a cash flow deficit from operations, steadily deteriorating from negative $98 million in 

2009 to negative $841 million in 2014. CEOC was unable to generate sufficient EBITDA to 

service the interest on its funded debt—much less accumulate sufficient cash to pay debt 

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principal upon maturity—and was able to pay its operating expenses only through a combination 

of asset sales and additional borrowing. For the years 2008 through 2014, CEOC’s EBITDA 

was sufficient to fund only an average of 62 cents of every dollar of interest expense. 

91. CEC’s financial disclosures admitted the insufficiency of CEOC’s cash flow to 

service its outstanding debt. Starting with its year-end 2008 10-K, CEC’s yearly filings 

conceded that CEC “may not be able to generate sufficient cash to service all of our 

indebtedness, and may be forced to take other actions to satisfy our obligations under our 

indebtedness that may not be successful.” As noted below, in 2011 and thereafter, CEC’s 

warning became more severe. 

92. Starting in 2009, Caesars’ long-range plans—which included its projected 

EBITDA for the next five- to seven-year period—predicted negative free cash flow for the 

foreseeable future. When adjusted to account for interest expense and capital expenditures, the 

long-range plan prepared at year-end 2009 projected negative cash flow at CEOC of 

$799 million in 2010, negative $914 million in 2011, and continuing negative figures for the 

remainder of the forecast period. The long-range plan prepared at year-end 2010 was worse. It 

forecast CEOC’s cash flow as negative $1.133 million for 2011, negative $931 million for 2012, 

and continuing negative figures throughout the forecast period. Similarly, the long-range plan 

CEOC prepared at year-end 2011 projected negative cash flow of $862 million for 2012, 

negative $588 million for 2013, and continuing negative figures throughout the forecast period. 

93. By early 2012, CEC began to admit that it did not expect to be able to pay its 

debts. CEC’s 10-K for 2011, for example, disclosed: 

As of December 31, 2011, $11.1 billion face value of our indebtedness is 

scheduled to mature in 2015 (assuming the extension options with respect to the 

CMBS Financing and PHW Las Vegas senior secured loan are exercised), 

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representing 49% of the total face value of our debt . . . . We do not expect that 

our cash flow from operations will be sufficient to repay this indebtedness. 

CEC’s 10-K filings for 2012, 2013, and 2014 included similar language. 

94. By this point, the market had taken notice of CEOC’s precarious situation. 

CEOC’s debt was trading at a significant discount, a clear indication that the market did not 

believe CEOC would be able to fully repay its debt. CEC, in fact, purchased $5.9 million of 

CEOC debt in 2012 at a discount of 46%. In August 2012, Barclays stated, “Caesars is the most 

highly levered company in our coverage universe, which not only limits its financial flexibility, 

but also keeps the risk of bankruptcy high, in our view.” Barclays, Patiently Waiting; Initiating 

Coverage at UW (Aug. 22, 2012). 

95. In February 2013, RBC Capital Markets concluded that Caesars would 

“effectively run out of cash by the end of 2014.” RBC Capital Markets Report, Q4 Results 

Uninspiring; Maintaining Underperform (Feb. 26, 2013). In May 2013, RBC opined that 

Caesars’ asset sales were “short-term solutions” that would “only buy them time until 2015,” 

when “a contentious debt-for-equity exchange or distressed debt exchange will need to be 

consummated.” RBC Capital Markets Report, Q1 Results Did Little to Change Our View 

(May 2, 2013). In June 2013, Deutsche Bank sent the Sponsors an analysis indicating CEOC’s 

equity value was negative $5.8 billion and predicting that CEOC would not be able to pay debt 

holders. 

96. The transfers of valuable assets from CEOC to CEC and its affiliates only 

deepened CEOC’s insolvency. Although touted as measures that would improve CEOC’s 

liquidity, the transfers stripped CEOC of its chief sources of material and incremental EBITDA, 

making it even harder for CEOC to service its debt load with the remaining, lower growth and 

lower margin regional casinos. 

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C. THE CONFLICTED BOARDS OF DIRECTORS. 

97. At all relevant times, the Sponsors have owned a controlling interest in CEC. 

Moreover, pursuant to a January 28, 2008 stockholders’ agreement, the Sponsors control the 

makeup of the nine-person CEC board, with four members designated by Apollo and four 

members by TPG. Through this control, the Sponsors also control the management, business 

decisions, and operations of each of CEC’s subsidiaries, including CEOC. Although others 

sometimes joined or left the CEC board, the core group of directors on the CEC board at all 

relevant times consisted of defendants Loveman, Bonderman, Davis, Rowan, and Sambur. 

Loveman was CEC’s Chairman and CEO; Rowan and Sambur were partners of Apollo; and 

Bonderman and Davis were partners of TPG. 

98. CEOC was a wholly-owned subsidiary of CEC until May 2014, when CEC 

purported to sell a 5% interest in CEOC to a group of hedge funds. However, at all times CEC 

owned the controlling interest in CEOC and appointed all members of CEOC’s board. Between 

2009 and June 2014, CEOC’s board consisted of only two directors. Defendant Loveman was a 

director at all times and the other director was either CEC’s incumbent CFO, which was either 

Eric Hession or Jonathan Halkyard, or CEC’s Deputy General Counsel, Michael Cohen. The 

following chart depicts the composition of CEOC’s board at the times relevant to this Complaint: 

Date Range CEOC Inside Directors CEOC Independent 

Directors 

April 2009-May 2012 Loveman, Halkyard None 

July 2012-April 2014 Loveman, Cohen None 

May 2014-June 27, 2014 Loveman, Hession None 

June 27, 2014-January 2015 Loveman, Rowan, Sambur, 

Bonderman, Davis 

Stauber, Winograd 

99. In addition, it was generally understood that Apollo directly supervised the 

strategic direction of CEOC, including decisions about financing, divestments, and restructuring. 

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Defendant Sambur, an Apollo partner served, in effect, as CEOC’s Chief Financial Officer. 

Defendant Rowan, similarly, often acted as CEOC’s de facto CEO. 

100. Many of the CEC and CEOC directors stood to benefit financially from the 

transactions they approved or caused CEOC to approve. Rowan and Sambur each had interests 

in the Apollo-sponsored private investment fund that, through affiliates, owned a significant 

percentage of CEC and CAC. Upon information and belief, defendants Bonderman and Davis 

had similar equity interests in CEC and CAC through investment vehicles sponsored by TPG. 

Upon information and belief, Loveman and Halkyard also participated in a management 

incentive plan that rewarded them with grants of options on CEC’s stock. Additionally, 

Loveman and Hession were shareholders of CAC, which had a significant equity interest in 

Growth Properties, which was the transferee of many of the transferred CEOC assets, held 

one-third of the voting rights in CES, and owned approximately 84.4% of CIE. 

101. CEOC was at all relevant times until June 2014, in fact or substance, owned, 

controlled, and dominated by CEC and the Sponsors or individuals related to them. CEOC was 

also, at all relevant times, insolvent. Thus, all of the transactions identified in this Complaint 

between CEOC and CEC, CIE, CERP, CAC, Growth Partners, or other subsidiaries or affiliates 

of CEC were self-dealing transactions. As a result, the consideration CEOC received for each 

transfer, the negotiation process that led to each transaction’s terms and conditions, and the 

governance process that resulted in each transaction’s approval by the CEOC board are subject to 

the test of their entire fairness to CEOC. The burden of establishing entire fairness is one 

defendants bear. 

102. Although it is common in self-dealing transactions for the affected parties to form 

special board committees to negotiate the transactions, that did not happen here. CEOC had no 

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outside or independent directors from April 2009 until June 2014 and no special committee of 

CEOC’s board was formed at any time in that period to review the terms, conditions, 

consideration, or substance of any of the asset transfers that took place. In fact, while CEC’s 

public filings stated at various times that special board committees had been formed to review 

particular transactions, in each case those committees were committees of CEC’s board—not 

CEOC’s. Similarly, while CEC disclosed that it had solicited or received opinions from outside 

advisors about the fairness of transactions from a financial point of view, those opinions 

concerned the fairness of the transactions to CEC or to the transferees of the assets, were 

prepared by financial advisors retained by CEC or the Sponsors, or were manipulated to align 

with the goals of CEC and the Sponsors. In no case did CEOC receive an independent fairness 

opinion. 

103. Throughout this period, CEOC was compelled to transfer to CEC or affiliates of 

CEC CEOC’s most valuable assets without the benefit of a non-conflicted board, without 

independent legal advisors, without independent financial advisors with an appropriate 

engagement letter, without independent fairness opinions, and without the benefit of the most 

rudimentary elements of fair process. Instead, the Sponsors and CEC conspired to deprive 

CEOC of the most basic principles of corporate governance so that the Sponsors and CEC could 

remove the company’s best assets with impunity. One reason CEOC’s legal protections and 

rights were ignored was that the lawyers representing CEOC in these transactions—the law firm 

of Paul Weiss—also served, simultaneously, as the lawyers for CEC and the CEC affiliates who 

were taking the assets from CEOC. Simply put, no one was looking out for CEOC’s interests in 

connection with these transfers. 

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D. CEC AND THE SPONSORS’ EFFORTS TO DELAY, HINDER OR 

DEFRAUD CREDITORS 

104. By no later than late 2011, it had become clear that CEOC would never repay its 

debts at anything close to face value, a fact CEC conceded a few months later in its 10-K filing. 

By June 2012, Apollo had prepared an analysis that projected CEOC’s projected 2012 cash flow 

would be nearly $1 billion in the red and further concluded that CEOC would be billions of 

dollars short if it were forced to pay debts as they became due. 

105. At this point, a core group of individuals—affiliated with CEC and the Sponsors 

and who at that time controlled and implemented every significant aspect of Caesars’ strategic 

direction—agreed upon and conspired in a multi-faceted scheme to strip CEOC of valuable 

assets, to compel CEOC to enter into damaging financial transactions, and to otherwise position 

CEC and the Sponsors to benefit from CEOC’s inevitable bankruptcy or major restructuring. 

This core group of individuals included the conflicted members of the CEC and CEOC boards—

CEC’s Loveman, Apollo’s Rowan and Sambur, and TPG’s Bonderman and Davis (collectively, 

the “Conflicted Directors”)—who stood to benefit financially from the transactions they 

conceived, implemented, and approved. 

106. A presentation that Apollo prepared and circulated to its co-conspirators in 

October 2012 described the plan. That presentation proposed what would become the transfer of 

CEOC’s Planet Hollywood and CEOC’s interest in the Baltimore Horseshoe casino, and it called 

for the creation of a new entity outside of CEC and CEOC—owned and controlled by CEC and 

the Sponsors but unburdened by CEOC’s massive debts—to take ownership of the assets. The 

presentation pointed out that CEC and the Sponsors could use this new entity to purchase a 

“controlling stake in strategically valuable unencumbered assets.” It also observed that the 

transaction provided “ancillary benefits in the event of a restructuring,” including the ability to 

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“strengthen our hand in a potential restructuring with as little capital outlay as possible.” Even 

more candidly, it admitted that a “transaction like this is the only way we see it to ‘have our cake 

and eat it too’.” 

107. The conspirators implemented their plan over the ensuing two years. In that 

period, they stripped CEOC almost entirely of its valuable properties in Las Vegas, transferred 

control over CEOC’s invaluable intellectual property and property management business to a 

“bankruptcy remote” entity, forced CEOC to repay the entirety of its intercompany revolver with 

CEC, and engaged CEOC in financial transactions aimed to benefit CEC and the Sponsors. As 

detailed throughout this Complaint, the conspirators performed countless overt acts in 

furtherance of their scheme, from the transactions themselves to repeated efforts to reduce the 

consideration paid to CEOC; used a variety of machinations to obtain valuation opinions from 

financial advisors with terms and ranges beneficial to CEC and the Sponsors; made 

misrepresentations concerning the origins of the transactions; and concealed material information 

that contradicted their goals. 

108. Throughout the course of their scheme, the conspirators knew that CEOC’s 

insolvency complicated their efforts to take assets from CEOC. The October 2012 presentation 

observed that a “[n]ovel transaction like this is more difficult to do should things get more dire” 

and that the “legal analysis gets more difficult with passage of time.” 

109. Despite—or, perhaps, because of—this knowledge, an indispensable feature of 

the conspirators’ scheme was to ensure that they completely controlled the process by which the 

asset transfers and financial transactions were structured, evaluated, and approved. They 

selected the assets to be transferred and they initiated the financial transactions. They suggested, 

established, and negotiated the financial terms of the transactions. They chose and controlled the 

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financial advisors and any special committees used to evaluate the consideration to be paid to 

CEOC. The conspirators made certain that there were no meaningful controls in place to 

advocate for and protect CEOC’s independent interests. They assured that CEOC, despite its 

insolvency and divergent interests from CEC, would have no role in the negotiation of financial 

terms, no independent legal or financial advisors, and no independent board members. As a 

result, CEOC had no one to negotiate the fair value of the properties or challenge the specious 

arguments, counter-factual assumptions, and misinformation that the conspirators advanced to 

implement their plan. 

E. CAESARS’ BUSINESS PLAN 

1. Caesars’ Success Is Driven By Synergies 

110. Commercial gaming is built on a business model that is attractive to investors. At 

its most basic level, thanks to the law of large numbers, gaming is a business where the customer 

buys a dollar worth of chips with the expectation over time of receiving (1) entertainment value 

and (2) something less than a dollar in return. Thus, the more time a casino can keep its 

customers gaming (or shopping, staying, eating, and drinking) in its properties the better. 

Caesars, in its form at the time of the LBO transaction, largely had been structured to maximize 

the amount of time its customers spent in Caesars’ properties, both on an absolute basis and 

relative to the properties of its competitors. Caesars did this by capitalizing on three key 

categories of synergies. 

111. The first was the synergies created by the structure of Caesars itself—in 

particular, the sheer scale of the company and its geographic diversity. Over the course of many 

years, Caesars had developed a network of local and regional casinos that extended its brand into 

global markets, including properties in virtually every gaming market of significance in the 

United States. Many of these local and regional casinos were only modestly profitable in their 

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own right; however, they provided Caesars with the critical ability to interact with potential 

customers of its destination Las Vegas properties in their home markets. This hub-and-spoke 

system increased Caesars’ revenues by incentivizing Caesars’ large international and domestic 

customer base to patronize its Las Vegas casinos when customers visited there. The system also 

benefited the regional properties, whose affiliation with the Las Vegas properties encouraged 

customers to visit local Caesars properties rather than competitors’ properties. 

112. The second category was the synergies created by Caesars’ assemblage of 

properties on the Las Vegas Strip. Over time and through a number of acquisitions preceding the 

LBO transaction, Caesars developed a dominant and concentrated presence in the center of the 

Las Vegas Strip (which it called “the 50 yard line”), including properties such as Caesars Palace, 

Paris Las Vegas, Bally’s Las Vegas, The Cromwell, Harrah’s Las Vegas, and The Quad, as well 

as surrounding undeveloped land. After the LBO, Caesars continued to build this presence 

through the acquisition of the Planet Hollywood casino and the development of the Linq retail 

and entertainment venue. Caesars’ strategy to anchor its business model at the key intersection 

of Flamingo Road and Las Vegas Boulevard was intended to ensure that, once brought to 

Las Vegas, customers would stay within the Caesars system. 

113. The third category of synergies was Caesars’ Total Rewards customer loyalty 

program. Total Rewards was the brainchild of defendant Gary Loveman, an academic who holds 

a doctorate in economics and taught at Harvard Business School. Loveman was an expert in 

loyalty management programs, having implemented them for such companies as Disney, 

McDonald’s, and American Airlines in the 1990s. In 1998, Harrah’s hired him to become its 

Chief Operating Officer. 

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2. Total Rewards: “The Key To The Empire.” 

114. Total Rewards serves several functions, the foremost of which is to incentivize 

every Caesars customer to focus his or her gaming and entertainment spend exclusively on 

Caesars properties. It is, at once, the system by which Caesars observes and records the 

preferences, activity, and spending of individual customers; compiles data about customer 

preferences and interests; optimizes its promotional offerings to customers; creates incentives for 

customers to spend money at its properties; keeps customers within the Caesars casino, hotel, 

entertainment, and retail system; and serves as a communication channel between Caesars and its 

customers. In so doing, Total Rewards is the engine that drives and optimizes the synergies of 

Caesars’ broad network of properties. It is, as CEC itself has claimed, “The Key to the Empire.” 

115. Total Rewards currently has 46 million customers, and Caesars estimates that 

7 million customers are active at any given time. Upon joining Total Rewards, Caesars 

customers are issued a membership card, which they swipe whenever they gamble, drink, dine, 

or shop at a Caesars property. In return, customers receive Rewards Credits they can redeem for 

food, lodging, and other purposes at all Caesars properties, as well as for perks through partner 

organizations. Total Rewards sets consistent and transparent earnings rates for Reward Credits 

and recognizes a member’s status consistently across properties. According to its members, the 

most valuable feature of Total Rewards is that its members can redeem Reward Credits at any 

Caesars property, regardless of where the Reward Credits were earned. 

116. Underlying Total Rewards is an extensive database containing information about 

Caesars’ customers, which the program collects as customers use their cards. This data—“big 

data”—reveals useful information about customer spending, such as the days of the week and the 

times of days customers patronize Caesars properties; what they spend money on and where they 

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spend it; what sort of dining, shopping, and gambling they prefer; what Caesars properties they 

frequent; and, most fundamentally, how much money they spend or can be expected to spend. 

117. Caesars’ software tracks its customers’ activities on both an individual and a 

general level. Caesars then tailors its product offerings and business strategy accordingly. In 

particular, Caesars uses Total Rewards to target selected customers with marketing promotions, 

to drive traffic to specific properties or particular products, and as a way to reach its customers 

by direct mail, social media, and other means. Total Rewards also employs sophisticated 

prediction models to compare actual customer behavior with predicted behavior. 

118. Through these advanced analytics, Total Rewards has improved the “win per 

position” at the casinos in its network. For example, in the twelve months preceding June 30, 

2013, CEC had a 15% and 21% fair share premium in its destination and regional markets, 

respectively, versus competitors. As a result, with virtually identical gaming machines or tables, 

and presumably a very similar cost structure, CEC properties generated significant incremental 

gaming revenue per position, per day, across its portfolio of properties compared to its 

competitors. 

119. It was this system that allowed Caesars to build its extensive network of 

properties and realize its plan to collect customers nationwide and drive them to its marquis 

properties in Las Vegas. And when those customers do travel to Las Vegas, promotional offers 

encourage them to stay in Caesars hotels, dine at Caesars restaurants, entertain themselves at 

Caesars venues, and gamble at Caesars casinos. Caesars thus generates significant cross-market 

play, or “cross play,” as customers move from one casino to another. The Sponsors and Caesars 

have repeatedly credited Total Rewards as the key to its business success. In a 2013 offering 

memorandum, for example, CEC disclosed: 

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Caesars Entertainment revolutionized the approach the gaming industry takes 

with respect to marketing by introducing the Total Rewards loyalty program in 

1997. Continual improvements have been made throughout the years enabling the 

system to remain the most effective in the industry and enabling Caesars 

Entertainment to grow and sustain revenues more efficiently than its largest 

competitors and generate cross-market play, which is defined as play by a guest in 

one of Caesars Entertainment’s properties outside its home market, which is 

where the guest signed up for Total Rewards. To support the Total Rewards 

loyalty program, Caesars Entertainment created the Winner’s Information 

Network, or WINet, the industry’s first sophisticated nationwide customer 

database. In combination, these systems supported the first technology-based 

customer relationship management strategy implemented in the gaming industry 

and have enabled Caesars Entertainment’s management teams to enhance overall 

operating results at its properties. 

CERP Preliminary Offering Memorandum, dated September 24, 2013, at 2, available at CEC 

8-K (Sept. 24, 2013). 

120. After coming to Harrah’s as its Chief Operating Officer in 1998, Loveman 

became its Chief Executive Officer in 2003 and its Chairman in 2005. Loveman has consistently 

extolled the importance of Total Rewards to Caesars’ business. In a 2003 Harvard Business 

Review article, Loveman wrote that “we’ve come out on top in the casino wars by mining our 

customer data deeply, running marketing experiments, and using the results to develop and 

implement finely tuned marketing and service-delivery strategies that keep our customers 

coming back.” Gary W. Loveman, Diamonds in the Data Mine, Harv. Bus. Rev. (May 2003). 

As Loveman explained, the depth of the database that he created, coupled with the ability to use 

Total Rewards at multiple properties, was critical to its effectiveness: “It’s important to note that 

our database strategy hinged on our ability to combine data from all of our properties, so 

customers could use their reward cards in multiple locations. Combining transactional data from 

all our sites was so important that we developed and ultimately patented the technology to do it.” 

Id.

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121. Total Rewards has unquestionably driven Caesars’ growth and profits. For 

example, in its first year of operations as part of the Caesars network, the revenues at 

Planet Hollywood increased by 24%. Likewise, when Harrah’s Chester opened in Pennsylvania 

in 2007 as the second casino in the area and in a less desirable location than its competitors, its 

first-year revenue still outperformed its competitors by 6%. Caesars attributed that success to 

leveraging its Total Rewards program and its preexisting relationships with members in the area. 

By contrast, after Harrah’s East Chicago, Indiana casino was sold, and thus taken out of the Total 

Rewards program, there was a material drop in its gross gaming revenue; tellingly, there also 

was a corresponding increase in play at Harrah’s other properties from Total Rewards members 

who had exclusively patronized the East Chicago casino before it was sold. 

CEOC’S UNLAWFUL TRANSFERS 

122. At the direction of the Sponsors, CEC’s board undertook a series of transactions 

between 2009 and 2014 to reorganize Caesars into a “Good Caesars” and a “Bad Caesars.” The 

plan was to transfer CEOC’s more valuable, higher-growth properties to affiliates owned and 

controlled by the Sponsors and CEC (the “Good Caesars”), while leaving the low-growth or 

no-growth (and, often, money-losing) properties and massive acquisition debt at CEOC (the 

“Bad Caesars”). Freed from the demands of debt service, “Good Caesars” would prosper. 

Meanwhile, CEOC—the “Bad Caesars”—would flounder until its creditors agreed to restructure 

their debt or CEOC simply erased its debt in a bankruptcy filing. 

123. At the heart of the Sponsors’ plan was the strategy of transferring to the Good 

Caesars those CEOC assets with a promising future. This included its burgeoning online gaming 

business, its well-known World Series of Poker franchise, CEOC’s valuable Las Vegas 

properties, and its strategic and irreplaceable Total Rewards program. This was planned as a 

series of steps, with a new transfer being undertaken after the last one closed. Under the pretext 

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of creating “liquidity” for CEOC or “extending the runway,” the Sponsors and CEC were, in 

truth, simply removing CEOC’s best assets and hastening its demise. 

124. The transfer of these key assets meant, among other things, that the synergies of 

the Caesars hub-and-spoke system and the economies of scale and marketing advantages arising 

from the contiguous properties CEOC had assembled were moved from CEOC to affiliates of 

CEC, such as CIE, CERP, Growth Partners, and Caesars Enterprise Services. In terms of 

particular casinos, CEOC was left with only Caesars Palace in Las Vegas (and because the 

conjoined Octavius Tower is no longer owned by CEOC, in reality CEOC now has only part of 

Caesars Palace) and local and regional casinos that primarily served to drive traffic to CEOC’s 

Las Vegas properties—which now were not CEOC’s anymore. These critical assets were 

transferred for inadequate consideration and for less than reasonably equivalent value. 

Completely lacking independence, CEOC’s board rubber-stamped the transfers, usually without 

even bothering to have a board meeting. 

125. The divestment of CEOC’s Las Vegas properties also changed the character of 

CEOC itself. Previously, CEOC was an enterprise centered on its Las Vegas properties and was 

valued by the multiples of EBITDA commonly used for Las Vegas-based gaming companies. 

Today, though, CEOC has only one significant property in Las Vegas. As a result, CEOC is now 

generally viewed simply as a regional gaming company. Accordingly, it is valued by the market 

at a lower multiple of EBITDA than it would have been but for the asset transfers. 

A. TRANSFER OF CAESARS’ ONLINE GAMING BUSINESS 

126. One of CEOC’s most promising corporate opportunities was the advent of online 

gaming, which included both the opportunity for online customers to play for fun (“PFF”) and, if 

and when permitted by state gaming laws, “real money” games. Even before the LBO, Caesars 

had begun to explore online gaming opportunities, established an internal working group, and 

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retained the consulting firm of Booz Allen Hamilton to advise it about online business 

opportunities. A January 2008 Booz Allen report contemplated that meaningful revenue would 

be earned from PFF and found that CEOC’s online business already had 45,000 unique monthly 

visitors, each playing an average of thirteen games. A September 2009 presentation to the CEC 

board estimated that PFF could produce $10 million to $15 million in EBITDA. That spring and 

summer, a Caesars management internal working group and representatives of the Sponsors 

studied how to expand CEOC’s online gaming business. Moreover, upon information and belief, 

during this time frame, CEOC was already entering into partnerships that gave its brands a 

presence in social and mobile gaming 

127. CEOC already had a ready advantage in this online market because of its longtime sponsorship of the well-known World Series of Poker (“WSOP”) and its ownership, 

control, and licensing of the intellectual property associated with WSOP. Although it was 

uncertain if and when Congress or state legislatures would legalize “real money” online gaming, 

the enormous revenue potential was obvious. For example, in a March 2, 2010 presentation, 

CED told investors that online opportunites “could change the game” and was one of the “key 

drivers” of Caesars’ future value. An October 2012 presentation prepared by Apollo described 

expanded online poker as one of the “[c]ompelling upside opportunities.” 

128. In any event, not long after the LBO, the Sponsors and CEC decided to usurp the 

corporate opportunities and considered a variety of options and structures to help them do so. In 

2008, Caesars hired Mitch Garber, an entrepreneur experienced in the online gaming market, to 

help them enter the market. Garber became a full-time Caesars employee in January 2009. 

129. Ultimately, CEC and the Sponsors decided that the online gaming business should 

be moved to CEC, with a significant equity stake also going to Garber and other executives of 

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the business. In April 2009, CEC formed Harrah’s Interactive Entertainment (“HIE”)—now 

known as Caesars Interactive Entertainment (“CIE”)—as a subsidiary of CEC.6

 The sole 

purpose of CIE was to receive this intellectual property from CEOC and exploit the opportunities 

in online gaming. 

130. The CEC board approved the transfer of CEOC’s online gaming business at a 

board meeting held on April 30, 2009. This meeting was attended by defendnts Bonderman, 

Davis, Loveman, Rowan and Sambur. The two-person CEOC board—which consisted of 

Loveman and Halkyard—approved the transfer by signing a boilerplate written consent that 

same day. Loveman and Halkyard gave no meaningful consideration to the transaction and, in 

fact, did not even bother to hold a board meeting. 

131. On May 1, 2009, in a series of back-to-back transactions, CLC (a wholly owned 

subsidiary of CEOC) transferred its ownership in the WSOP trademark, related intellectual 

property, and all of its sponsorship, media, and licensing contracts to CEC. CEC accomplished 

this by having CEOC transfer these assets to a newly formed, CEC-owned holding company, 

HIE Holdings Topco (“TopCo”), with a license back to CEOC of rights to use the intellectual 

property in WSOP events held on CEOC’s own properties. TopCo then transferred the assets to 

an intermediate holding company, HIE Holdings, which then transferred the assets to CIE. In 

return, CEOC received 150,000 shares of preferred stock and 1,000 shares of common stock of 

TopCo, which in turn held 150,000 preferred shares in HIE Holdings. However, CEC had all of 

the voting stock and 90,000 preferred shares in HIE Holdings, which in turn owned 87.1% of 

HIE. 

 

6

 CEC failed to disclose that CIE was a subsidiary of CEC until March 15, 2012, when the 

formation of Acquisition and Growth Partners was announced. Even then, that “disclosure” 

was buried in notes to CEC’s financial statements.

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132. A hurried, flawed and incomplete opinion from Duff & Phelps on April 30, 2009 

valued the rights CEOC transferred (net of the license back) at $15 million, although the dilution 

CEOC suffered in the three-tiered CIE holding company structure meant that CEOC received 

substantially less. Duff & Phelps’ method of valuing CEOC’s intellectual property was 

improper. Duff & Phelps also relied upon projections provided by a member of Garber’s team, 

who had a motive to undervalue CEOC’s contribution since he himself would be getting equity 

in CIE. These projections were inconsistent with and materially below the projections Caesars 

had prepared and used in the ordinary course of its business. Duff & Phelps also ignored other 

evidence of the value of the WSOP intellectual property and used an exaggerated discount rate. 

Moreover, Duff & Phelps did not take into consideration any of the enormous upside that 

featured so prominently in the multiple valuations and analyses previously prepared by Caesars 

and its consultants, including the potential legalization of online gambling and PFF gaming. 

133. There was no reason why this corporate opportunity could not have stayed with, 

and been exploited by, CEOC. CEOC already controlled the WSOP trademark and associated 

intellectual property and, of course, was prominent in the gaming space overall. Moreover, 

while CEOC was financially pressed by 2009, it had the financial resources to support its entry 

into the online gaming space as shown by its ability to fund other business initiatives. 

134. The lack of process in the transfer of WSOP’s intellectual property and Caesars’ 

online gaming business is striking. The price of the WSOP rights was not negotiated at arm’s 

length; in fact, there is no evidence that anyone actually negotiated the $15 million price at all, 

and certainly no one negotiated it on behalf of CEOC. None of the intellectual property 

transferred was offered to any third-party buyer or investor and none was subject to any 

marketing process to ensure that CEOC could maximize the value of the transferred assets. 

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There was no special committee of independent directors formed from CEOC’s board to review 

the deal (and, in fact, CEOC had no independent directors). CEOC did not have independent 

lawyers or advisors to represent it, and no analysis was done of CEOC’s solvency. Similarly, the 

CEOC board gave no consideration to whether CEOC should have received any value for the 

potential upside of its online gaming business, whether CEOC should have had a means in 

sharing in CIE’s upside, or even whether the TopCo preferred stock CEOC received really was 

worth $15 million. 

135. Instead, the entire process was dominated by CEC and the Sponsors. They 

conceived of the idea of transferring CEOC’s intellectual property to an entity which they 

controlled, retained Duff & Phelps to value the assets, decided upon the deal structure, and set 

the price for the transfer. All of the transaction documents on behalf of every single Caesars 

entity, including CIE and CEOC, were signed by one person, CEC’s CFO Jonathan Halkyard. 

136. The consideration CEOC received for the transfer of its WSOP intellectual 

property was grossly inadequate. Although nominally worth $15 million, the TopCo preferred 

stock CEOC received probably was worth less than $12 million. By contrast, the value of the 

assets CEOC transferred—even ignoring their enormous upside potential—was more than 

$60 million. More fundamentally, the transaction CEC and the Sponsors engineered was 

designed to usurp the valuable future corporate opportunity CEOC expected in the online gaming 

space. Even before the Sponsors had completed the LBO in 2008, CEOC had been exploring 

these opportunities, using PFF to expand into broader forms of social gaming and online real 

money games, and leveraging its existing franchise in the WSOP. However, those opportunities 

were diverted to CIE which, in turn, was mainly owned by CEC. Upon information and belief, 

the damages to CEOC from this usurpation of corporate opportunity could exceed $1 billion. 

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B. CEOC INTERCOMPANY LOAN TO CEC 

137. In 2009, CEOC borrowed $235 million and made an intercompany loan of that 

amount to CEC. CEC did not pay any interest on this loan, despite the fact that CEOC itself had 

paid about $5.8 million in interest to borrow the money to lend to CEC. CEOC was insolvent at 

the time. 

138. There is no evidence that CEOC received anything of value in return for its 

interest-free loan to CEC, that the CEOC board did anything to consider the reasonableness of 

the loan, or that CEOC’s board even approved it. 

C. 2010 CMBS LOAN AGREEMENT AMENDMENT AND 

TRADEMARKS TRANSFER 

139. At the time of the 2008 LBO, CEOC transferred six properties (the Flamingo 

Las Vegas, Paris Las Vegas, Rio Las Vegas, Harrah’s Las Vegas, Harrah’s Atlantic City, and 

Harrah’s Laughlin (collectively, the “CMBS Properties”)) to CEC to facilitate CEC’s efforts to 

raise $6.5 billion in debt secured by the properties. Both before and after the transfer, the CMBS 

Properties used intellectual property assets, such as their trademarks and other intellectual 

property associated with the properties’ casinos, restaurants, shops, and other activities (the 

“CMBS IP”) in the course of their business. The CMBS IP was held and owned by a CEOC 

subsidiary known as Caesars License Company, LLC (“CLC”). 

140. Upon information and belief, CLC had no operations or premises independent 

from those of CEOC and was formed solely to serve as the nominal holder of intellectual 

property owned by CEOC. Upon information and belief, CEOC was the sole member of CLC, 

appointed all of its officers and dominated all aspects of CLC’s business and operations. 

Accordingly, CEOC and CLC are appropriately viewed as alter egos and the acts, decisions, and 

assets of CLC should be viewed as the acts, decisions, and assets of CEOC itself. 

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141. In the years after the LBO, the Sponsors and the CMBS lenders discussed 

possibly restructuring the CMBS loans. Among other things, the CMBS lenders sought to 

improve their position in the event they decided to foreclose on a CMBS property by obtaining 

either the right to require Caesars to continue to operate the properties after foreclosure or the 

right to withdraw the properties from the Caesars system but have the continuing ability to use 

the CMBS IP. This latter option would require CEOC to give the CMBS lenders a license to the 

CMBS IP. 

142. CEOC, through CLC, owned the CMBS IP and should have had the right to 

charge a substantial amount for any license to use it. However, the negotiations with the CMBS 

lenders were handled by David Sambur of Apollo, not by anyone representing CEOC. As a 

result, these assets were taken from CEOC for almost nothing. 

143. Because CLC was not a party to the CMBS loan documents, a complicated 

structure was used to transfer the CMBS IP from CLC to each of the CMBS PropCos. This was 

done by amending existing licenses and executing assignments of CLC’s rights. Specifically, on 

August 31, 2010, CLC executed intellectual property assignment agreements with each CMBS 

PropCo by which CLC assigned all of its right, title, and interest in the relevant CMBS IP to the 

PropCo. In return, CLC received $100 from each PropCo. Simultaneously, the parties executed 

Amended and Restated License Agreements, in which each of the CMBS PropCos granted to 

both CLC and CEOC non-exclusive, limited-use, royalty-free, and nontransferable licenses to the 

CMBS intellectual property in exchange for $100. The Amended and Restated License 

Agreements also contained a reversionary clause providing that, if and when the CMBS debt was 

repaid, the CMBS PropCos would give CLC an exclusive royalty-free, irrevocable, transferable, 

and sublicensable license to use the CMBS IP. 

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144. The effect of these agreements, then, was (a) to have the CMBS PropCos each 

pay CLC $100 for the wholesale transfer of CLC’s intellectual property rights, (b) to have CLC 

and CEOC repay each PropCo the $100 for limited licenses to that same intellectual property, 

and (c) to arrange for CLC to have a reversionary interest in the intellectual property when the 

CMBS loans were repaid. Put another way, CLC conveyed its intellectual property rights to the 

CMBS Properties for the term of the loans for no consideration. The amendment to the CMBS 

Loan Agreement and the transfer of the CMBS IP closed on August 31, 2010. 

145. The CMBS Trademarks were, and are, extremely valuable. The book value of the 

intellectual property has been calculated as high as $320.9 million, and even conservative 

analyses value the trademarks at no less than $42 million and probably far more. 

146. As with other asset transfers, CEOC and its wholly owned subsidiary, CLC, did 

not have the benefit of independent directors, independent lawyers, independent advisors, or a 

fair and open process. Nor was a fairness opinion solicited or received on CEOC’s or CLC’s 

behalf. Instead, the transfers were decided upon, negotiated, and documented by Sambur, the 

Sponsors, CEC, and advisors to CEC and the CMBS PropCos. In fact, CEOC and CLC were so 

far removed from the process that there is no evidence that the boards of CEOC or CLC even 

executed approvals, consents, or authorizations for the transfers. 

D. TAX REFUND 

147. For the taxable years 2005 through 2008, CEOC was a member of the CEC 

consolidated group for tax purposes (“CEC Group”). In 2009, the CEC Group reported a net 

operating loss (“NOL”) and carried it back to the 2006 and 2008 tax years by filing a tentative 

refund claim on Form 1139 Corporation Application for Tentative Refund in October 2010. The 

2009 NOL carryback generated a Federal income tax refund (“2009 Refund”) based in part upon 

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a comparison between the CEC Group NOL and the amount of income taxes reported by the 

CEC Group from 2005 to 2008, some of which was attributable to CEOC. 

148. In March 2011, CEOC was credited with $220.8 million, the cash amount of the 

2009 Refund provided to the CEC Group. CEOC, however, was owed $55.8 million above and 

beyond that credit. CEC did not credit or otherwise pay CEOC this amount and failed to provide 

any justification for failing to do so. Moreover, there is no indication that CEOC was even 

aware of its right to any portion of the 2009 Refund until March 17, 2011, when CEC filed its 

2010 Form 10-K. 

149. In addition to the 2009 Refund, CEC did not fairly compensate CEOC for CEC’s 

use of the NOLs that CEOC and the other Debtors generated. Non-debtors, including CEC, used 

approximately $4.02 billion of the NOLs without any compensation to CEOC or recognition 

that—had these NOLs not been used by the non-Debtors—they would have been available to the 

Debtors to be applied against future taxable income. 

150. Because the non-Debtors, including CEC, never paid CEOC or the other Debtors 

for use of these NOLs, CEOC is entitled to the value of the lost economic benefit from the 

utilization of these NOLs by the non-Debtors. 

E. 2011 EASEMENT ON UNDEVELOPED LAND 

151. In 2011, CEOC subsidiaries DCH Exchange LLC, Las Vegas Resort 

Development Inc., Winnick Holdings LLC, and TRB Flamingo LLC granted affiliates of CEC 

easements over four lots of unimproved Las Vegas real estate, comprising approximately 

25.8 acres, directly east of The Linq, The Cromwell, and the Flamingo Las Vegas Hotel & 

Casino. The transferees (the “Easement Transferees”) were Flamingo Las Vegas Propco, LLC, 

Imperial Palace Corporation (now known as 3535 LV Corp.), and Caesars Linq, LLC. 

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152. Two of the transferees make an annual payment to CEOC for granting the 

easements of about $1.7 million, subject to annual 3% increases; however, a third transferee— 

Flamingo Las Vegas PropCo—has paid nothing for the easement granted to it. Granting the 

easement diminished CEOC’s value by as much as $60 million, and correspondingly increased 

the value of the transferees. 

153. There is no evidence that CEOC followed any governance process in reaching the 

decision to grant the easements, that it used any marketing process to price or sell the easements, 

that it offered the easements to any third party on an arm’s-length basis, that the decision to grant 

the easements was made by disinterested directors of CEOC, that CEOC engaged independent 

financial or legal advisors to review the granting of the easements, or that CEOC requested or 

received a fairness opinion about the transfer. In fact, there is no evidence that CEOC’s board 

was even asked to consider or approve the transfer, or did. 

F. 2011 WSOP TRANSACTION 

154. The 2009 transfer of CEOC’s WSOP intellectual property rights left CEOC with a 

residual business of hosting live, in-person WSOP tournaments (“WSOP Tournament Rights”). 

In 2011, however, CEC and the Sponsors decided to take these assets, too, away from CEOC. 

155. Planning for this transfer began in mid-2010. As with the May 2009 transfer of 

WSOP’s trademarks and intellectual property and CEOC’s online gaming business, the 

negotiations essentially were between CEC and CIE, even though the assets being sold belonged 

to CEOC. Moreover, since CEC owned the vast majority of CIE equity, the discussions 

basically involved CEC talking with itself. Over a year and a half of discussion, the price CIE 

contemplated paying CEOC for its WSOP Tournament Rights steadily fell from as much as 

$55 million to $38 million to $30 million to $25 million, finally dropping to $20.5 million. 

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156. The 2011 WSOP Transaction, which closed on September 1, 2011, consisted of a 

series of interrelated transfers. First, CEC created a new wholly-owned subsidiary called 

Caesars Tournament, LLC (“CT”), which paid CEOC $20.5 million for its rights to host the 

WSOP tournament. CT then sublicensed those rights to CEC for five years for a yearly license 

fee of $2 million. Next, CIE purchased the rights from CT for $20.5 million and replaced the 

sublicense between CT and CEC with one directly between CIE and CEC for the same term of 

years and same annual license fee. CEC then granted CERP’s Rio Las Vegas property the right 

to operate the WSOP tournaments for $2 million per year. Finally, CIE granted CEC the right to 

operate certain live WSOP tournament events for a per-event fee. 

157. Lost in all of this complexity was any legitimate negotiation with CEOC, any 

meaningful board process, or any tangible economic benefit to CEOC. No independent law firm 

represented CEOC: instead, the firm of Paul Weiss represented all of the entities involved in the 

deal. CEOC’s board consisted of two inside directors: Loveman and Halkyard, who were the 

CEO and CFO, respectively, of CEC. Both were clearly conflicted, and neither reviewed the 

transaction in his capacity as a CEOC director. Upon information and belief, this transaction 

was never presented to the CEOC board for review or approval; it was instead approved by 

CEC’s board alone. Halkyard signed the numerous transaction agreements on behalf of all 

non-CIE entities to the transactions, including CEOC, CEC, and CT. 

158. As with the earlier transfer of WSOP’s trademarks and intellectual property and 

CEOC’s online gaming business, the transfer of the WSOP Tournament Rights was one-sided 

and unfair to CEOC. The price, terms, and conditions were not negotiated at arm’s-length. The 

Tournament Rights were not offered to any true third-party buyers or investors and it was not 

subject to any marketing process to ensure that CEOC could maximize the value of the 

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transferred assets. There was no special committee of independent directors formed of CEOC’s 

board to review the deal, nor did CEOC ask for or receive a fairness opinion. The process was 

initiated by CEC, managed by CEC, negotiated by CEC, priced by CEC, and structured by CEC 

to ensure that there would be no serious outside review of the transaction or its economics. 

159. Although the CEC board engaged a financial advisor named Valuation Research 

Corporation (“VRC”) to issue an opinion about the transaction, VRC’s analysis was superficial 

and flawed. Among other things, VRC inexplicably reduced forecasted revenues by speculating 

that the tournament would be moved to a less attractive location, failed to account for gaming 

revenues tied to entrants in WSOP, subtracted an EBITDA adjustment from hotel revenues, 

ignored non-financial benefits in valuing the WSOP Tournament Rights, used an unsourced 

percentage to calculate incremental gaming revenue, and failed to include revenue from 

spectators at the events. 

160. As a result of this one-sided process, CEOC received the nominal consideration of 

$20.5 million for surrendering the right to host the world’s leading poker tournament. And, in 

fact, CEOC did not actually receive $20.5 million in cash—or any cash at all—for the asset; 

instead, CEC simply wrote down the balance of CEOC’s $310 million intercompany debt to 

CEC by this amount, leaving a balance of $289.5 million. This amount does not constitute 

reasonably equivalent value, as the asset was worth at least $50 million at the time of the 

transfer. 

G. LINQ AND OCTAVIUS TRANSFERS 

161. At the time of the 2008 LBO, Caesars borrowed $6.5 billion secured upon the 

CMBS Properties (the “CMBS Debt”). To make the properties available as security for these 

loans, CEC had CEOC transfer them to CEC, which then placed them into Rio Properties, a CEC 

subsidiary. 

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162. In late 2012, CEC decided to refinance the CMBS Debt. During the ongoing 

recession, among other things, credit conditions changed and the credit markets required lower 

loan to value ratios, creating an “equity gap” that had to be filled before lenders would consent to 

a refinancing. Unwilling to invest their own money in this effort, CEC and the Sponsors decided 

to plug the equity gap by simply taking properties from CEOC. 

163. The two CEOC properties CEC and the Sponsors focused on were both recently 

built (or not yet completed) properties in Las Vegas.–One was Project Linq, a dining, 

entertainment, and retail development corridor that connected Caesars’ Flamingo Casino and The 

Quad Resort & Casino on the east side of the Las Vegas Strip. Linq was especially important to 

Caesars because of its location at the heart of the Strip across the street from Caesars Palace and 

in the midst of six other Caesars properties. Linq was the conduit connecting the assemblage of 

Caesars properties in Las Vegas, reinforcing the physical synergies CEOC had patiently 

developed over the years. 

164. The other property was the Octavius Tower, a 23-story, VIP luxury hotel complex 

that featured 662 guest rooms, 60 suites, and six villas. Octavius was the newest of the six hotel 

towers that comprise the Las Vegas Caesars Palace complex, and it was located immediately 

next to, and structurally integrated into, the Caesars Palace casino itself. Control of Octavius 

would give its owner significant ability to influence access to Caesars Palace and its value, 

future, and use. 

165. Linq and Octavius were valuable assets. By fall 2013, CEOC had spent 

$878 million building Linq and Octavius, and CEOC projected that Linq alone would generate 

between $68 million and $103 million annually in EBITDA. In addition, Linq and Octavius 

were integral to CEOC’s synergies in Las Vegas, since Linq would be a conduit connecting 

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several CEOC properties and Octavius was the newest part of the Caesars Palace complex. 

Thus, the Sponsors and CEC recognized that selling the properties would undermine CEOC’s 

value. In fact, TPG’s Bonderman wrote Rowan in 2009 that “alienating the [Octavius] Tower by 

selling it or leasing it to someone else for long term is likely to turn out to be a bad idea. The 

Octavius Tower was planned and built as an integral part of our core property, and I suspect that 

losing control of that will be value destructive over time.” 

166. CEOC, of course, was not an obligor on the CMBS Debt and had no reason to 

contribute its assets to plug the CMBS equity gap. In fact, the Sponsors’ plan would actually be 

detrimental to CEOC. In addition to taking two valuable properties away from CEOC, CEC 

intended as part of the refinancing to create a new entity—Caesars Entertainment Resort 

Properties, LLC (“CERP”)—that would ultimately own Linq and Octavius as well as the existing 

CMBS Properties. Six of these eight properties were in Las Vegas, creating in essence a 

formidable standalone competitor to CEOC. 

167. It was Apollo that conceived of, planned, structured, and executed the strategy. 

From the beginning, Apollo partners Rowan and Sambur pushed to find ways to take Linq and 

Octavius from CEOC without paying CEOC anything of value in return. This included 

advocating flawed theories of valuation (one of which resulted in hundreds of millions of dollars 

of purported value to CEOC from the release of CEC’s guaranty of the CMBS debt even though 

CEOC was not an obligor with respect to that debt), arguing for the unprecedented use of 

avoided overhead costs as consideration in a transaction or fairness opinion, creating 

assumptions for a fairness opinion that were premised on a degree of virtual certainty which 

simply did not exist and were contradicted by known facts at the time, and continuing to 

pushback on financial experts who rejected Apollo’s tactics. Because CEC was in a position of 

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conflict, Apollo and Paul Weiss decided to get an opinion from a financial advisor that CEOC 

was receiving “reasonably equivalent” value for the transfer of the two properties to CERP. 

Apollo and Paul Weiss engaged Perella Weinberg Partners (“Perella”) to provide the opinion. 

However, throughout this process, it was Apollo and Paul Weiss—and not CEOC—who dealt 

with Perella. 

168. Apollo’s goal was to avoid paying CEOC any tangible consideration. Apollo 

proposed a succession of specious arguments to justify this outcome. One argument hinged on 

the fact that the CMBS Properties paid CEOC for certain shared service expenses (“allocated 

CMBS expenses”) relating to the CMBS Properties. Apollo argued that—if the CMBS Debt 

were not refinanced—the CMBS Properties might go bankrupt and then stop paying their share 

of these expenses, leaving CEOC with the full burden of some, if not all, of these expenses. 

Thus, Apollo maintained, CEOC would receive an intangible benefit from the refinancing by 

eliminating this risk, the value of which could be calculated by applying a multiple to the amount 

of expense reimbursements that were in jeopardy. 

169. A second theory was even less credible. CEC had guaranteed CEOC’s debts and 

also guaranteed the CMBS operating companies’ lease obligations to CEOC. Under the 

proposed refinancing, CEC would be released from its guarantees of the CMBS lease payments, 

which would improve CEC’s financial health and, in turn, would make CEC a more reliable 

guarantor of CEOC’s debt. Apollo argued that this was a multi-billion dollar benefit to CEOC. 

170. The final consideration for Linq and Octavius was a basket of securities, debt 

forgiveness, cash, and alleged intangible benefits. This included $69.5 million of CEOC debt 

securities, $80.7 million in cash, and forgiveness of $450 million of debt CEOC had incurred in 

the construction of Octavius and Linq. In addition, there was the alleged intangible benefit 

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relating to protection of CEOC’s continued receipt of the allocated CMBS expenses, which 

Perella valued at $378 million. Although Apollo continued to urge that there was value in the 

release of the CEC lease guarantee, Perella gave no value to it. 

171. Even without the CEC lease guarantee, Perella found that this consideration was 

“reasonably equivalent” to the value of Linq and Octavius. In reaching that conclusion, Perella 

valued Octavius between $162 million and $203 million; the RDE Casino (which was part of 

Linq) between $67 million and $83 million; the Linq High Roller observation wheel between 

$265 and $346 million; and the Linq retail areas between $252 million and $303 million. 

Combined, Perella’s valuation of these properties totaled between $197.8 million and 

$386.2 million, net of debt, which itself exceeded, by a large margin on the high end, the 

$150.2 million in cash and notes paid to CEOC. However, Perella then added $378 million in 

value attributed to additional costs that Perella assumed would have otherwise been allocated to 

CEOC if the refinancing did not occur and the lenders foreclosed on the assets. Based on that 

purported value of $378 million, Perella concluded that CEOC received value in excess of the 

value of the transferred assets. 

172. Perella’s analysis was based upon information provided to Perella by Apollo. 

Much of this information was inaccurate and untrue. For example: 

a. Perella’s valuations of Linq and Octavius were based upon the owners’ 

rights to receive lease payments from CEOC under the existing operating 

leases, which were $15 million per year for the RDE Casino and 

$35 million annually for Octavius. At Apollo’s direction, Perella used 

several wrong assumptions, including the assumption that these were fair 

market value leases when, in fact, the RDE Casino lease payments had 

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been based upon outdated assumptions from the earnings of a previous 

casino and the Octavius lease had been created to provide credit support 

for the Linq/Octavius debt. 

173. As to the High Roller observation wheel, Perella assumed that there would be 

flat cash flow from the operation, instead of recognizing that receipts would, at a minimum, 

reflect inflation. 

174. Perella also relied upon inaccurate and untrue assumptions in ascribing a 

$378 million value to the ostensible protections CEOC received from the risk that the CMBS 

Properties would default someday on the allocated CMBS expenses. Apollo’s theory was that, 

absent a refinancing, the CMBS Properties were likely to default on their loans, which would 

cause the CMBS lenders to foreclose on the properties, then remove them from CEOC’s 

management, and then stop paying the allocated CMBS expenses. But each of these assumptions 

was wrong. First, there was no evidence that the refinancing was at risk; instead, both sides 

viewed a foreclosure as “mutually destructive.” Second, there was little evidence that the CMBS 

lenders would have foreclosed, or that Apollo would have allowed them to foreclose. Third, 

there was even less evidence that the CMBS lenders, upon foreclosure, would have removed the 

properties from the CEOC system. In fact, as described above, in 2010 the lenders had 

specifically negotiated for, and won, the right to keep the properties under CEOC’s management 

in the event of foreclosure. Thus, under no plausible scenario was CEOC at risk of losing this 

payment stream. 

175. The effect of this misinformation was that Perella substantially undervalued Linq 

and Octavius and materially overvalued the consideration CEOC received in the transactions. 

Conversely, by giving any value at all to the possibility that the refinancing had assured CEOC 

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the continued payment of the allocated CMBS expenses, Perella concluded that the transaction 

provided CEOC with a net benefit of about $230 million. 

176. Perella’s analysis also did not take into account the reduction in value CEOC 

suffered from the transfer of Octavius. Octavius had over 650 of the most modern and expensive 

rooms and villas in the Caesars Palace complex. By moving the property out of CEOC, Apollo 

effectively gave CERP (and, thus, CEC) significant leverage in renegotiating lease terms as well 

as a seat at the table in any potential sale or other disposition of Caesars Palace. Thus, there was 

also a control premium attached to this transfer that Perella should have, but failed to, consider. 

177. The officers and directors of CEOC played no meaningful role in the negotiations 

about the sale of Linq and Octavius to CERP. Instead, the discussions were between Sambur and 

Paul Weiss on the one hand and Perella on the other. Even then, the negotiations were not about 

what CERP would be willing to pay or what CEOC would be willing to accept. Instead, the 

subject of the discussions was what it would take before Perella would sign a letter giving the 

opinion that CEOC was receiving reasonably equivalent value for the assets. Thus, although 

Sambur was officially negotiating on the “buy side,” he was also controlling the decisions on the 

“sell side.” Relying upon inaccurate and untrue information from Apollo, Perella finally agreed 

to issue its opinion. 

178. The CEOC board consisted of two inside directors, Gary Loveman and Michael 

Cohen. Neither was disinterested. Loveman was the CEO and Chairman of CEC. Cohen was a 

senior vice president, deputy general counsel, and corporate secretary of CEC. Loveman and 

Cohen received materials about the transaction the night before their board meeting. The board 

meeting, held at 6:30 a.m. local time, was telephonic and lasted 45 minutes. During the meeting, 

Loveman and Cohen heard presentations from financial and legal advisors, and considered and 

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approved the sale. There was no apparent discussion as to whether the sale was a fraudulent 

transfer, whether CEOC was insolvent, whether there were bankruptcy-related litigation risks, or 

whether the consideration was adequate. Instead, Loveman and Cohen quickly rubber-stamped 

the deal. 

179. The transaction closed on October 11, 2013. Octavius Linq Holding Co. (a 

wholly owned subsidiary of CEOC) transferred the equity of Octavius Linq Intermediate 

Holding Co., which owns Octavius Tower, Linq, RDE Casino and the High Roller observation 

wheel, to CEC (which then subsequently transferred it to Rio Properties LLC). The deal violated 

every principle of corporate governance. The transaction was conceived and implemented by 

one of CEOC’s controlling shareholders, without substantive input from or involvement by 

officers or directors of CEOC. Although the transfer was a related party transaction and CEOC 

was insolvent, no independent committee of the CEOC board was constituted to oversee it and, 

in fact, CEOC had no independent directors at the time. Nor was Linq and Octavius offered to a 

third party, or subject to a marketing process to maximize the price CEOC would receive for the 

properties. There was no meaningful negotiation over the price of the transfers. Instead the 

consideration for the transaction was negotiated among Apollo and Paul Weiss and Perella, 

which made faulty assumptions based on inaccurate or incomplete information Apollo and Paul 

Weiss provided to it. Approval of the transfers was made by a CEOC board that was conflicted, 

uninformed, hurried, and poorly advised. 

180. Not surprisingly, the consideration CEOC received for these two properties was 

far below their fair market value. Octavius and the RDE Casino were soon conveyed to CERP in 

a sale-leaseback under which CERP received lease payments of $35 million for Octavius and 

$15 million for RDE for a 15-year term. Using standard valuation methods, this indicates that 

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the purchase price should have been at least $213 million for Octavius and at least $87 million 

for RDE. If more realistic assumptions are used, moreover, the value of Octavius and RDE 

would be even greater. Linq was similarly undervalued. As already described, misinformation 

and erroneous assumptions used by Perella undervalued the RDE Casino by millions of dollars. 

Likewise, unrealistic assumptions about the High Roller observation wheel resulted in an 

excessive range of value for the asset (of $265 million to $346 million) that materially 

understated the midpoint of its real value, which was around $340 million or greater. In sum, 

excluding the alleged consideration in the form of “indirect benefits” and faulty valuation 

assumptions, the actual equity value of these properties (net of debt) was at least $325 million 

and likely more than $425 million. 

H. TRANSFER OF PLANET HOLLYWOOD AND HORSESHOE 

BALTIMORE CASINO 

181. At about the same time as the Linq and Octavius transfers, the Sponsors and CEC 

were also arranging for CEOC to transfer two valuable casino properties to a newly-formed CEC 

affiliate named Caesars Growth Partners. The purpose of the transfers was to take profitable, 

irreplaceable, and promising assets from CEOC and place them in an entity that would be 

removed from the claims of CEOC’s creditors and that would capture the assets’ value for the 

Sponsors and CEC. 

1. The Creation of CAC and Growth Partners 

182. The Sponsors, CEC, and their advisors started by creating the affiliates they 

would need to take ownership of the CEOC assets. First, they formed a holding company named 

Caesars Acquisition Company (“CAC”) to serve as the vehicle for the Sponsors’ investment in 

the scheme. CEC capitalized CAC by distributing subscription rights to CAC’s common stock 

to CEC’s existing shareholders. Because the Sponsors and their affiliates owned most of CEC’s 

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common stock, they ended up with most of the CAC stock as well, investing $457.8 million for 

66.3% of CAC Class A common stock. 

183. Paul Weiss then formed an operating company named Caesars Growth Partners. 

On October 21, 2013, CAC used the $1.17 billion in proceeds from the CAC rights offering to 

purchase a 42.47% equity interest in Growth Partners. Simultaneously, CEC acquired 57.6% of 

the equity interest in Growth Partners by contributing its interest in CIE and its holdings of 

CEOC 5.625% Senior Notes due June 2015. Although these notes had a face value of 

$1.1 billion, CEC and the Sponsors valued them at only $750 million because of CEOC’s 

insolvency. That same day, the Sponsors entered into an Omnibus Voting Agreement with CEC 

and CAC that gave the Sponsors absolute control of CAC’s board of directors. 

184. At the end of the day, the Sponsors owned slightly more than half of CAC and 

CAC owned 42.4% of Growth Partners. CEC owned the other 57.6% of Growth Partners, and 

the Sponsors owned 60% of CEC. Adding it all up, this meant that the Sponsors had a 60% 

interest in Growth Partners, as well as complete control of CAC’s board and, thus, Growth 

Partners’ management and operations. 

185. As noted before, the purpose of these entities was to remove CEOC assets from 

the reach of creditors the value of these assets would flow to the Sponsors, and not CEOC or its 

creditors. As one CEC executive frankly admitted, “CGP enables us to raise capital for and 

inject our own capital into the growth areas of our business and protect them from insolvency 

given $20B+ in debt.” Even better from the Sponsors’ point of view, the value of these assets 

would flow to the Sponsors, and not CEOC or its creditors. 

2. Planet Hollywood and Horseshoe Baltimore Transfers 

186. On October 21, 2013, CEC, CAC, and Growth Partners entered into an agreement 

(the “2013 Transaction Agreement”) with CEOC that required CEOC to transfer to Growth 

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Partners CEOC’s interests in the Planet Hollywood Resort and Casino in Las Vegas and the 

Horseshoe Baltimore Casino, as well as 50% of the stream of management fees CEOC would 

earn from managing those two properties. In addition, the Agreement contemplated that CEOC 

would enter into a Management Services Agreement with Growth Partners and CAC that would 

redefine the economic relationship between CEOC and CEC. 

187. CEOC had acquired Planet Hollywood in 2010. Planet Hollywood occupied 

35 acres adjacent to other Caesars properties on the Las Vegas Strip. It had 2,500 guest rooms, 

an outdoor pool, 9 restaurants, 6 bars, and a 64,500 square foot casino. Planet Hollywood had 

generated significant free cash flow, partly because CEOC had invested substantial amounts in it 

each year. In fact, between 2010 and 2012, Planet Hollywood revenue increased by 27% and 

EBITDA by 186%. 

188. Horseshoe Baltimore, which opened in August 2014, is a casino with a 122,000 

square foot gaming floor, 2,500 slot machines, 150 video poker machines, a 25-table WSOP 

Poker room, and 150 table games. In October 2012, Caesars entered into a joint venture 

agreement with Rock Gaming and three local partners to build this casino. 

189. The plan to transfer Planet Hollywood and Horseshoe Baltimore was conceived 

by the Sponsors in 2012. The specific purpose of the transaction was to strengthen the Sponsors’ 

hand in negotiations with creditors in a potential restructuring, to maintain the Sponsors’ and 

CEC’s ownership of the assets for future upside potential, and to create a CEC “war chest” in the 

event of a potential restructuring. According to Bonderman, the Sponsors selected properties 

with excess cash flow in order to achieve precisely those goals. 

190. A first step was to deal with the conflicts inherent in the transaction. Although 

the transfer of Planet Hollywood and Horseshoe Baltimore from CEOC to Growth Partners was a 

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related party transaction, the Sponsors and CEC did not address that issue. But they were 

troubled by another fact, namely, that CEC (the ultimate owner of CEOC) and CAC (the ultimate 

owner of Growth Partners) had different sets of public shareholders, while the Sponsors were on 

both sides of the deal, creating the possibility of litigation from the public shareholders of CEC 

and CAC. Although CEOC’s insolvency that motivated the Sponsors and CEC to undertake the 

Growth transaction, no one protected CEOC’s interests by constituting a special committee to 

ensure fairness to CEOC. 

191. The Sponsors directly represented CAC in the negotiations. On November 14, 

2012, the CEC board created the Valuation Committee to negotiate with the Sponsors, and the 

Valuation Committee soon hired Evercore Partners as its financial advisor to review and opine 

on the structure of the transaction and the fairness of the price from CEC’s perspective. But the 

CEC Valuation Committee and Evercore were acting on behalf of CEC and CEC alone; neither 

they nor anyone else negotiated on behalf of CEOC or reviewed the transaction from CEOC’s 

vantage point. And, as with other transfers of CEOC assets, the Sponsors controlled the process: 

in fact, Evercore’s compensation was contingent upon the transaction being consummated as the 

Sponsors envisioned. Evercore was to be paid a $3.5 million fee upon delivery of a fairness 

opinion, as well as a “discretionary fee” of as much as $3 million at the conclusion of the 

assignment. Ultimately, Evercore was paid $2.25 million of this “discretionary fee.” 

192. Although the CEC Valuation Committee was supposed to ensure that CEC got a 

fair price for the Planet Hollywood and Horseshoe Baltimore, in practice the Committee allowed 

the Sponsors to manipulate the valuation process to artificially depress the price of the assets. As 

one example, Caesars management did not provide Evercore with updated projections for 

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Planet Hollywood revenue, even though Caesars had more recent sets of projections and 

Evercore had specifically asked for them. 

193. The Sponsors also manipulated projections in other ways. At the time of the 

transaction, Planet Hollywood was on the verge of signing entertainer Britney Spears to 

a multi-year deal to perform at Planet Hollywood and renovating the show’s venue. CEOC 

projected that this would substantially increase Planet Hollywood’s EBITDA. But those 

forecasts never made it to Evercore. Instead, the Sponsors told Evercore that the Spears contract 

would have no material impact on Planet Hollywood’s EBITDA or value. The Sponsors’ desire 

to depress the price for Planet Hollywood was so strong that a TPG officer, Greg Kranias, at one 

point objected to entering into the agreement with Britney Spears at all because the deal might 

increase the value of Planet Hollywood, thus raising the price Growth Partners would have to 

pay for the property. 

194. In the end, the Spears contract was more successful than even CEOC had hoped. 

Her tickets went at twice the rate of other successful shows, and VIP packages for the shows 

quickly sold out. By then, though, Planet Hollywood was in the hands of Growth Partners and it 

was Growth Partners, not CEOC, that reaped the benefits of Planet Hollywood’s success. 

195. In addition to the Sponsors’ manipulation of projections and information, 

Evercore made several errors that lowered the valuation of both properties. In valuing 

Planet Hollywood, for example, Evercore treated Planet Hollywood as a regional property 

despite its prime location on the Las Vegas Strip. As a result, Evercore used the wrong multiple 

of EBITDA to calculate Planet Hollywood’s value. Evercore also used an incorrect EBITDA 

value in its projections and failed to apply a forward-looking multiple to account for 

Planet Hollywood’s significant expected growth. 

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196. In valuing CEOC’s joint venture interest in the Horseshoe Baltimore, Evercore 

simply misunderstood how much of the joint venture CEOC owned. Evercore valued CEOC’s 

interest in the Horseshoe Baltimore by assuming that CEOC owned 40.9% of the venture. In 

fact, CEOC had 51.8%. Evercore’s mistake arose from the faulty assumption that CEOC would 

sell some of its equity in the property to its venture partners in the fourth quarter of 2013. In 

fact, the sale did not occur then, and CEOC’s ownership interest was still 51.8% at the time 

Horseshoe Baltimore was transferred. Although CEOC later did sell some of its interest in the 

casino to its partners, the sale happened in February 2014; by then, Growth Partners owned the 

property, so the proceeds went to Growth Partners, not CEOC. 

197. Relying upon manipulated and outdated projections based on other mistakes, 

Evercore gave the opinion that consideration “reasonably equivalent to the fair market value of 

each such asset” was a cash payment of $360 million, constituting $210 million for 

Planet Hollywood, $70 million for the Planet Hollywood management fees, and $80 million for 

the Baltimore casino and management fees. Additionally, a subsidiary of Growth Partners 

assumed $513 million of debt secured by Planet Hollywood, although this was offset by roughly 

$40 million in restricted cash on deposit and as much as another $175 million in unrestricted 

cash held by the holding company that owned Planet Hollywood. 

198. In light of these errors, it is no surprise that this valuation was deficient by at least 

$437 million, and probably much more. Contemporaneous indicators of value confirm that 

Planet Hollywood and Horseshoe Baltimore were worth significantly more than the 

consideration CEOC received. As one example, Cushman & Wakefield, who had been engaged 

by Key Bank Real Estate Capital, appraised Planet Hollywood at $866.9 million under an 

income capitalization approach. TPG reached a similar estimate of $830 million for 

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Planet Hollywood’s value in December 2012, using the same management projections that had 

served as the basis for Evercore’s opinion. Shortly after the Planet Hollywood and Horseshoe 

Baltimore transfers were closed, Apollo estimated that, by 2016, these properties would be worth 

$579 million and $260 million, respectively. 

199. A reason for this disparity, of course, was that the Planet Hollywood and 

Horseshoe Baltimore transfers were one-sided and unfair to CEOC. The sale was not negotiated 

at arm’s length, the assets were not offered to any third-party buyers or investors, and no 

marketing process was used to help CEOC maximize the value of the transferred assets. CEOC 

did not have independent legal or financial advisors or any other form of unconflicted 

representation in the negotiations. 

200. The CEC board approved the Planet Hollywood and Horseshoe Baltimore 

transaction at a board meeting held on October 21, 2013, and attended by defendants 

Bonderman, Davis, Loveman, Rowan, and Sambur. 

201. The CEOC board at the time consisted of two interested directors, Gary Loveman 

and Michael Cohen. Both were senior executives of CEC, and Loveman owned stock in CAC. 

There was no special committee of independent directors formed of CEOC’s board to review the 

deal, nor did CEOC ask for or receive a fairness opinion. The deal was presented to Loveman 

and Cohen for approval only after all of its terms had been finalized. Loveman and Cohen did 

not hold a meeting to consider the transaction, but instead approved the deal on October 21, 

2013, by signing a standard written consent. Once approved, CEOC subsidiaries PHW Las 

Vegas, LLC, PHW Manager, LLC, Caesars Baltimore Acquisition Company, LLC and Caesars 

Baltimore Management Company, LLC transferred their equity interests in Planet Hollywood 

Las Vegas and Caesars Baltimore Investment Co., LLC as well as 50% of the management fees 

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from PHW Manager, LLC and Caesars Baltimore Management Company, LLC to Growth in 

exchange for $360 million in cash. 

I. CMBS, CERP, AND GROWTH PARTNERS ACCESS TO TOTAL 

REWARDS AND PROPERTY MANAGEMENT SERVICES 

202. As part of the 2010 CMBS Loan Agreement Amendment, CEC directed CEOC to 

enter into a contract with the CMBS PropCos called the Shared Services Agreement. The 

purpose of the Shared Services Agreement was to give the CMBS lenders the power to compel 

CEOC to continue to manage the CMBS Properties in the event of a foreclosure. Among other 

things, the Shared Services Agreement stated that CEOC would supply each property with a 

complete accounting system, offer access to the property’s books and records, and prepare 

financial statements. More fundamentally, CEOC was required to provide the CMBS Properties 

with access to the Total Rewards program. As part of this agreement, the CMBS Properties paid 

CEC for CEOC’s services. CEOC, by contrast, received nothing from the CMBS PropCos 

except for a payment reimbursing CEOC for the “allocated” cost of providing these management 

services and 30% of CEOC’s “unallocated” corporate overhead expenses. 

203. In October 2013, when the CMBS Properties were transferred to the 

newly-formed CERP and Octavius Tower and Project Linq were taken from CEOC and given to 

CERP, a new Shared Services Agreement was executed and CEOC was required to provide these 

same services to CERP on the same basis as it had previously provided them to the CMBS 

Properties. 

204. On October 21, 2013, pursuant to the 2013 Transaction Agreement, CEOC 

entered into a Management Services Agreement that required CEOC to continue to perform 

management duties for the two properties and also to provide the properties with access to Total 

Rewards. CEOC’s compensation under the Management Services Agreement was minimal: 

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reimbursement of its actual out-of-pocket costs, a 10% “profit margin” on certain costs, and 

management fees tied to the properties’ performance. 

205. Notwithstanding the enormous value of Total Rewards and CEOC’s property 

management services, CEOC was paid little or nothing under these contracts. This failure to 

compensate CEOC for its services to CEC, CERP, and Growth Partners was yet another instance 

where the Sponsors and CEC took assets—in this case, services and access to its intellectual 

property—of value from CEOC for inadequate consideration. 

206. And, as before, CEOC’s directors and senior officers were conflicted because 

they were also directors or officers of CEC, CERP, CAC, Growth Partners, or other CEC 

affiliates and, in some cases, had a personal economic stake in CEC or these affiliates. CEOC’s 

board approved the 2010 Shared Services Agreement with the CMBS Properties, the 2013 

Shared Services Agreement with CERP, and the 2013 Management Services Agreement with 

Growth Partners without analyzing what consideration CEOC was receiving, or should receive, 

in return for the transfer of its rights in Total Rewards and the provision of property management 

services. At no point in this period did CEOC have independent directors who would have been 

in a position to consider the fairness of these transactions to CEOC, nor the benefit of any 

independent legal or financial advisors. Similarly, no fairness opinion was solicited, received, or 

considered in connection with any of these transactions. 

J. ASSET TRANSFERS OF MAY AND JUNE 2014 

207. By no later than the beginning of 2014 (if not long before then), CEOC’s liquidity 

had certainly reached the point where it would have to reach an out of court restructuring with its 

creditors or file for bankruptcy. With time running out, the Sponsors and CEC embarked upon a 

course of wholesale asset transfers, refinancings, and related transactions to strengthen the 

Sponsors’ hand in negotiations with creditors and ready CEOC for bankruptcy. The overall 

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purpose and effect of these transactions was to place CEOC assets in entities that the Sponsors 

and CEC owned and controlled and that were beyond the reach of creditors, to capture all of the 

synergies of the Caesars system for the Sponsors and CEC, and to intentionally diminish the 

value of CEOC. This reduced creditor leverage in any restructuring negotiations and, if a 

bankruptcy followed, simplified the Sponsors and CEC’s attempt to reacquire the assets of the 

“Bad Caesars” and re-create the original Caesars system. 

208. The measures the Sponsors and CEC took in the first half of 2014 were divided 

into separate transactions, but in truth they were part and parcel of a single overarching plan. 

The plan involved the transfer to Growth Partners of four more irreplaceable CEOC properties in 

Las Vegas and New Orleans, moving money out of CEOC into Growth Partners, transferring 

highly valuable undeveloped real estate to Growth Partners, moving control of Total Rewards to 

a “bankruptcy-remote” entity that Growth Partners and CERP would govern, taking CEOC’s 

property management business away from it, attempting to remove CEC’s guarantee of CEOC’s 

bond debt, having CEOC take on new first lien bank debt to garner the first lien banks’ support 

for a restructuring of CEOC, and amending CEOC’s credit agreements to change CEC’s 

guarantee of CEOC’s first lien bank debt from a guarantee of payment to a guarantee of 

collection. Once the Sponsors and CEC completed these steps, they reconstituted CEOC’s 

board, placing partners of Apollo and TPG in the majority. For the first time, the Sponsors also 

added to the CEOC board two outside directors, both of whom they knew from other business 

connections. 

1. The 2014 Transaction Agreement 

209. On March 1, 2014, CEOC entered into a Transaction Agreement (the “2014 

Transaction Agreement”) that required CEOC to transfer four of its premier assets to Growth 

Partners. It also required CEOC to license Total Rewards and most of its other intellectual 

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property to a new joint venture controlled by Growth Partners and CERP called Caesars 

Enterprise Services (“CES”). The total consideration to CEOC for these transfers included 

$1.815 billion in cash and the assumption of $185 million in debt, far less than the value of the 

properties. CEOC received no consideration at all in return for ceding control over Total 

Rewards and its intellectual property to the joint venture. 

2. The Four Properties Transaction 

210. The 2014 Transaction Agreement required CEOC to sell three of its Las Vegas 

casinos and its flagship New Orleans casino to Growth Partners. In addition, CEOC was 

required to relinquish 50% of the stream of management fees CEOC would have earned from 

managing the four properties. 

211. The three Las Vegas properties were located at the center of the Las Vegas Strip. 

They occupied two of the four corners of the central intersection and were uniquely positioned to 

take advantage of synergies from the other, nearby Caesars properties. The three casinos also 

benefitted from substantial foot traffic, which would increase when Linq was completed. 

a. Bally’s Las Vegas had been a staple of the Las Vegas Strip since 1973, 

with a large customer base and a substantial convention business. In 2013, 

CEOC funded a full renovation of its South Tower and, in late 2013, a 

third party began development of the Grand Bazaar, a retail venue there. 

b. CEOC had acquired The Cromwell (then known as the Barbary Coast) in 

2007. In February 2013, CEOC shut the property for 15 months to 

redevelop and rebrand it with funds CEOC had raised. When The 

Cromwell reopened in April 2014, it had fully remodeled hotel rooms, an 

extension of the rooftop for a pool and nightclub, a renovated facade, and 

a new restaurant and parking garage. 

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c. In 2005, Caesars acquired The Quad, then known as Imperial Palace. In 

December 2012, it underwent a $90 million, year-long renovation. 

Shortly thereafter, a second renovation began, which included 

improvements to the hotel towers, pool, and entertainment venues. This 

second phase of the renovation took more than a year and cost over 

$200 million. 

212. The fourth property was Harrah’s New Orleans, which had opened in 1999. 

Harrah’s is the largest casino in Louisiana and the only land-based casino in New Orleans. 

Harrah’s was located in downtown New Orleans and drew both tourists and locals as customers. 

CEC described Harrah’s as a “large asset in a stable market with no near-term new competition.” 

213. The Sponsors began working on the Four Properties Transaction in 2013. As 

before, Apollo conceptualized the transaction, selected the properties to be transferred, decided 

to whom they would be sold, and determined the structure and details of the sale. The proposal 

was presented to the CEC board on November 26, 2013. 

214. CEC and the Sponsors were again in a position of conflict. The Sponsors 

controlled both CEC and CAC which, respectively, owned the seller of the assets and the buyer 

of the assets. Nevertheless, CEC and CAC each also had public shareholders, whose interests 

were opposed. Thus, CEC and CAC each formed a Special Committee to structure and negotiate 

the price of the transfers. The CEC Special Committee first hired Centerview Partners LLC as 

its financial advisor. Later, it retained Duff & Phelps to provide a fairness opinion that the Four 

Properties Transaction was “on terms no less favorable to CEOC . . . than would be obtained in a 

comparable arm’s-length transaction with a person that is not an affiliate of [CEC].” The CAC 

Special Committee engaged Lazard as its financial advisor. 

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215. However, neither of these Special Committees nor their advisors protected 

CEOC’s interests or negotiated on behalf of CEOC, and no special committee of the CEOC 

board was formed at all. Nor did CEOC’s board ask for or receive an independent fairness 

opinion. 

216. In fact, on information and belief, the Sponsors pushed back on any attempt to 

have the fairness of the transaction to CEOC investigated by anyone. In connection with the 

transaction, an indirect subsidiary of CAC named Caesars Growth Properties Holdings borrowed 

$2 billion from a syndicate of banks that included Citibank, Credit Suisse, Deutsche Bank and 

UBS. The bank lenders insisted as a condition of closing that CEOC receive an opinion from an 

independent source that the consideration for the transfers was reasonably equivalent value and 

fair consideration. After negotiations, the banks accepted an opinion letter that said only that the 

purchase price was fair, from a financial point of view, to Growth Partners. 

217. Negotiations over the price and terms of the Four Properties Transaction occurred 

primarily between one of the CEC independent directors, Fred Kleisner, and one of the CAC 

independent directors, Marc Beilinson. CEOC was not involved or represented in any capacity. 

Ultimately, Kleisner and Beilinson agreed that CEOC should convey the four properties and its 

rights in the stream of management fees from those properties for consideration of $1.815 billion 

in cash and the assumption of $185 million in debt. 

218. On February 24, 2014, Centerview issued its fairness opinion to the CEC Special 

Committee and the CEC board, concluding (1) that the Four Properties Transaction was “fair, 

from a financial point of view” to CEC and (2) that the consideration was “reasonably equivalent 

to the aggregate of the enterprise value” of the Four Properties and to the management fee 

stream. On February 25, 2014, Lazard issued its fairness opinion to the CAC Board and the 

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CAC Special Committee, concluding that the Four Properties Transaction was “fair, from a 

financial point of view, to CGP.” On March 1, 2014, Duff & Phelps issued its fairness opinion 

to the CEC Special Committee and the Boards of CEC and CEOC, concluding that the Four 

Properties Transaction “is on terms that are no less favorable to CEOC or such relevant restricted 

subsidiary, as applicable, than would be obtained in a comparable arm’s-length transaction with 

a person that is not an affiliate.” Centerview and Duff & Phelps updated their opinions, with 

substantially identical language, on May 5, 2014, the date of the closing of the three Las Vegas 

properties, and May 19, 2014, the date of the closing of Harrah’s New Orleans. 

219. None of these opinions properly advised CEOC of the fairness of the Four 

Properties Transaction to CEOC. The Centerview opinion addressed whether the Four 

Properties Transaction was fair to CEC, and the Lazard opinion concluded only that the 

transaction was fair to CAC. The Duff & Phelps opinion—which at least purported to look at the 

transaction from CEOC’s point of view—did not consider the fairness of the deal, but instead 

concluded only that its terms were no less favorable to CEOC than an arm’s-length negotiation 

would have produced. Duff & Phelps was not retained by CEOC to independently assess the 

fairness of the consideration to CEOC because Sambur opposed it. 

220. Moreover, the Duff & Phelps opinion was defective because Duff & Phelps was 

instructed to rely upon inaccurate information. CEOC had projections—called the “January 

Business Plan”—that it prepared in the ordinary course of its business and which set forth the 

forecasted EBITDA for the four properties. Although the CEC board previously had approved 

the January Business Plan, the CEC Special Committee instructed Centerview and Duff & 

Phelps to use a different set of projections—known as the “February Business Plan”—in valuing 

the assets. The February Business Plan was not a forecast reflecting CEOC management’s best 

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judgment about the future of its business; instead, upon information and belief, it was created by 

CEC—at the behest of Kleisner—and was never used for any purpose other than valuing the 

Four Properties. 

221. The February Business Plan materially reduced the forecasted EBITDA for the 

four properties, which lowered their valuations correspondingly. For Harrah’s New Orleans and 

Bally’s Las Vegas, the February Business Plan reduced 2017-18 growth projections by half, 

applied a 25% haircut to forecasted financial improvements from management initiatives, and 

assumed added costs of 1.5%. For the Quad, the February Business Plan lowered 2017-18 

growth assumptions from 5% to 3%, reduced by half the amount of revenue the Quad would 

capture from adjacent casinos in the Linq complex, and cut revenue per occupied room by 7.5%. 

The February Business Plan reduced occupancy at The Cromwell, discounted its expected slot 

and table game revenues by 20%, and increased capital spending by $15 million. The overall 

effect of these adjustments was to reduce revenues for the four properties by over 5% for the 

period from 2014 through 2018 and EBITDA by more than 12%, even though the properties’ 

actual performance missed budgets during this period by only 2.8%. 

222. CAC paid CEOC $1.815 billion in cash and assumed $185 million in debt related 

to the four properties. Because this price was based on manipulated projections, it was 

materially below the assets’ true value. Moreover, CAC did not actually pay this much for the 

properties because of offsets. First, there was a cost item known as “Remaining Cromwell 

Costs” which were needed to reopen The Cromwell, and the funds to pay this already were on 

deposit and were transferred from CEOC to Growth Partners as part of the deal. Second, CEOC 

was required to indemnify Growth Partners for up to $33.465 million in cost overruns that might 

occur at The Quad. And third, CEOC was obligated to indemnify Growth Partners for 

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additional, still unquantified liabilities under multiemployer benefit plans based on facts and 

circumstances which already were known. 

223. There was a complete lack of fair process to protect CEOC. CEOC was not 

directly represented in the negotiations with CAC, did not have a special committee from its own 

board to negotiate or review the transaction, did not have independent legal or financial advisors, 

and did not ask for or receive an independent fairness opinion. In fact, although outside directors 

for CEOC were recruited as early as February 2014, the Sponsors decided that they would not 

join the CEOC board until after the completion of the Four Properties Transaction. There was no 

marketing process for the assets or any effort to solicit potential third-party buyers for bids on 

them. And this was by design: the CEC Special Committee lacked the authority to market these 

assets to third parties primarily because the Sponsors had decided that the properties should stay 

within the Caesars structure. 

224. Through these transactions, 3535 LV Parent, LLC transferred CEOC’s interests in 

3535 LV NewCo, LLC (the Quad), Corner Investment Company Newco, LLC transferred 

CEOC’s interests in Corner Investment Company, LLC (the Cromwell), JCC Holding Company 

II NewCo, LLC transferred CEOC’s interests in JCC Holding Company II, LLC (Harrah’s New 

Orleans), and Parball Corportion and Parball Parent, LLC (together with their subsidiaries) 

transferred CEOC’s interests in Parball NewCo, LLC (Bally’s Las Vegas) and other assets to 

Growth Partners. Management fees associated with these properties, including fees owned by 

management entities Cromwell Manager, LLC, Bally’s Las Vegas Manager, LLC, and The Quad 

Manager, LLC, also were transferred to Growth Partners through these transactions. 

3. Transfer of Undeveloped Las Vegas Real Estate 

225. In addition to its other Las Vegas assets, CEOC owned a substantial assemblage 

of prime undeveloped land to the east of several Caesars properties. CEOC purchased these 

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parcels in the early 2000’s as a way of protecting its ability to grow in Las Vegas. Upon 

information and belief, CEOC paid as much as $1 billion to buy these properties. 

226. As part of the Four Properties Transaction, CEOC transferred 31 acres of this land 

to Growth Partners. This was accomplished by CEOC subsidiaries 3535 LV Corp., 3535 Parent 

LLC, Octavius Linq Holding Co. LLC, Parball Corporation and Parball Parent LLC transferring 

their interests in the land to 3535 LV Newco LLC, Caesars Linq, LLC, and Parball Newco LLC. 

Despite the substantial value of the land, it was conveyed to Growth Partners for no 

consideration, and no value was attributed to this land in CEOC’s internal analysis, CEC’s 

internal analysis, or in the Centerview, Lazard, or Duff & Phelps opinions about the Four 

Properties Transaction. The Special Committees, too, apparently did not know about it. In fact, 

upon information and belief, Centerview, Lazard, Duff & Phelps, Kleisner, Beilinson, and 

Loveman were all unaware that the undeveloped land was included in the transaction. Similarly, 

the land’s transfer was not mentioned in CEC’s March 3, 2014 announcement of the Four 

Properties Transaction or in the May 6, 2014 8-K’s filed by CEC, CEOC and CAC, which 

disclosed and described the Four Properties Transaction. 

227. This transfer of 31 acres of CEOC’s undeveloped Las Vegas land was not made 

for adequate consideration or reasonably equivalent value and was never offered to a true 

third-party buyer or subject to any marketing process. In addition, the transfer also materially 

reduced the value of the 42 remaining acres of land that CEOC retained. The sale of the 31 acres 

cut off any direct access across CEOC-owned land between this remaining parcel and the 

Las Vegas Strip and reduced the parcel’s value for future development by removing its 

contiguousness with CEOC’s other properties. 

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4. Degradation of CEOC Enterprise Value 

228. The structure of the CEOC enterprise had been designed to create a nationwide 

hub-and-spoke system of regional and destination casinos. However, the successive property 

transfers in 2013 and 2014 stripped away from CEOC almost all of its Las Vegas casinos as well 

as the Harrah’s New Orleans Hotel and Casino. Thus, after the transfer of Octavius Tower, 

Project Linq, and Planet Hollywood in 2013 and the 2014 transfers of The Cromwell, The Quad 

Resort & Casino, Bally’s Las Vegas, Harrah’s New Orleans Hotel and Casino, and CEOC’s 

undeveloped land in Las Vegas, CEOC was relegated to having a single casino-hotel in 

Las Vegas – part, but not all of, Caesars Palace – and no longer credibly could be considered to 

be a Las Vegas-based gaming company. 

229. Because of the higher profitability of Las Vegas properties, gaming companies 

with a strong Las Vegas presence are valued at higher multiples of EBITDA than the multiples 

commanded by gaming companies that are predominantly regional. In 2014, for example, the 

former enjoyed average EBITDA multiples of 12.4 compared to 8.4 for regional operators. This, 

of course, was a fact well known to the Sponsors, CEC, CEOC’s board and their financial 

advisors, since all were intimately familiar with the gaming industry and since the entire purpose 

of constructing the CEOC system was to maximize revenues at its Las Vegas properties. 

230. The transfers of CEOC’s Las Vegas properties in 2013 and 2014 reduced CEOC’s 

EBITDA from its Las Vegas operations by nearly $330 million. In percentage terms, CEOC’s 

EBITDA from Las Vegas operations fell from 41% to 28%. Applying standard multiples to this 

shift in EBITDA indicates that the enterprise value of CEOC fell by billions of dollars. 

231. This destruction of value was no accident. The Sponsors and CEC conceived of, 

planned and executed these transactions precisely because they wished to transfer CEOC’s value 

to CERP, Growth Partners, and CEC itself. Apart from removing assets from the reach of 

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creditors, the transfers had the purpose and effect of increasing the Sponsors and CEC’s leverage 

against CEOC’s creditors when restructuring negotiations began and creating operational and 

structural issues that would favor a CEC-sponsored plan of reorganization if and when CEOC 

entered bankruptcy. 

K. THE B-7 TRANSACTION 

232. In addition to its bond debt, CEOC also had substantial borrowings from banks. 

At the beginning of 2014, this amounted to $4.4 billion and was secured by first liens upon 

CEOC’s assets. The bank debt was governed by a 2008 First Lien Credit Agreement, and was 

guaranteed by CEC (the “Bank Guarantee”). This Bank Guarantee was a guarantee of payment, 

meaning that CEC would be required by the first lien banks immediately to make good on 

CEOC’s bank debt in the event of a default. In practice, this meant that a CEOC bankruptcy 

would immediately lead to a CEC bankruptcy. 

233. In late 2013, CEC began thinking of an amendment to the First Lien Credit 

Agreement. One reason was that CEC wanted to move cash out of CEOC and into Growth 

Partners. Another was that CEC hoped to convert its Bank Guarantee into a guarantee of 

collection, which would allow CEC to postpone paying on the guarantee until CEOC emerged 

from bankruptcy. A third was that a refinancing of CEOC’s bank debt, and part of its bond debt, 

would provide a cover for other transactions CEC had in mind, such as its plan to remove its 

Bond Guarantees. And all of these measures would serve CEC’s overriding goal of weakening 

the bargaining position of CEOC’s creditors and strengthening the Sponsors’ hand in the 

restructuring negotiations that were to start in a few months. 

234. As before, Sambur led the efforts of CEC and the Sponsors, which conceived, 

designed, and structured this transaction, including the details of the amendment of CEOC’s 

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bank loans and the attendant modification of CEC’s Bank Guarantee, the redemption of the 2015 

Notes, and the timing, structure, pricing, and implementation of the transaction. 

235. The B-7 Transaction had several elements: 

a. The first was an amendment to the First Lien Credit Agreement to modify 

CEC’s Bank Guarantee from a guarantee of payment to a guarantee of 

collection. CEC needed the consent of a majority of the bank lenders to 

obtain this, which CEC obtained by arranging for two backstop lenders, 

GSO and BlackRock, to lend $1.1 billion under the First Lien Credit 

Agreement and, thus, give CEC a majority of favorable votes. 

b. Second, the B-7 Transaction was intended to replace term loans 

(denominated B-1, B-3, B-4, B-5, and B-6) that would mature between 

2015 and 2017. The new B-7 term loans would amount to $1.75 billion, 

have first priority liens, and bear interest at a rate of 9.75% per annum. 

c. Third, CEOC had two issues of its bond debt, the 5.625% Senior Notes 

due 2015 and the 10% Second Priority Notes due 2015 (together, the 

“2015 Notes”), which were scheduled to mature in 2015. As part of the 

B-7 Transaction, CEOC was to redeem both issues of notes. 

The B-7 Transaction also was part of other initiatives CEC was pursuing at the same time. For 

example, the modification of CEC’s Bank Guarantee was conditioned upon CEC’s success in 

selling a portion of its CEOC stock, to promote CEC’s goal of removing the Bond Guarantees. 

Similarly, CEC used the redemption of the 2015 Notes as a method of rewarding Chatham Asset 

Management for joining in the stock purchase that CEC used to claim it had removed the Bond 

Guarantees. The B-7 Transaction also took place at the same time as a financing that Apollo and 

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CEC were arranging for Growth Partners to pay for the Four Properties Transaction, and parties 

such as Chatham participated in both. Finally, CEC and CEOC used the redemption of the 2015 

Notes as a means to shift hundreds of millions of dollars from CEOC to Growth Partners, 

providing Growth Partners with working capital needed to operate the casinos and hotels it was 

about to acquire in the Four Properties Transaction. 

236. Ostensibly, the B-7 Transaction was undertaken to improve CEOC’s liquidity, 

extend the maturities of its funded debt, and provide CEOC with a “runway” to recover from its 

insolvency. In fact, the B-7 Transaction was intended to, and accomplished, exactly the 

opposite. More than $219 million went to pay the fees and expenses of the transaction. About 

$795 million was used to roll over existing B-1, B-3, B-4, B-5, and B-6 term loans. Over 

$1 billion was paid to redeem the 2015 Notes. These amounts, of course, exceeded the 

$1.75 billion CEOC borrowed in the B-7 Transaction. As desperately short of cash as CEOC 

was, it was required to come up with $315 million to cover the shortfall. Thus, at a time when 

the Sponsors and CEC were championing the notion of raising cash by selling CEOC assets, the 

B-7 Transaction required CEOC to burn up $315 million of its scarce cash, increased its bank 

debt, and raised the interest rate CEOC was paying for that debt. 

237. CEC’s true motivation for this was to set the stage for the restructuring the 

Sponsors and CEC intended to impose on CEOC’s creditors and, if that failed, to protect CEC 

when CEOC filed for bankruptcy. Almost every feature of the B-7 Transaction was intended to 

benefit the Sponsors and CEC, if not to intentionally inflict damage upon CEOC. For example: 

a. The $129 million in fees paid to GSO and BlackRock were not necessary 

to help CEOC. Instead, those were the fees GSO and BlackRock charged 

for the backstop facility, the purpose of which was to allow CEC to 

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marshal the votes it needed to change the terms of its Bank Guarantee to a 

guarantee of collection. 

b. There was no need to “roll” over the B-4, B-5, and B-6 term loans. None 

was due any earlier than 2016, and all had interest rates below the 9.75% 

rate of the new B-7 loans. In fact, none of the term loans was due in 2014 

and only $29.1 million was due in 2015. The purpose of rolling over the 

term loans was to justify the trouble and expense of undertaking the B-7 

Transaction in the first place, and as a further inducement to the lenders to 

approve the change of the Bank Guarantee to a guarantee of collection. 

c. There was no need to redeem the 2015 Notes. The purpose of the 

redemption was to funnel cash into Growth Partners as a device to remove 

the cash from the reach of CEOC’s creditors and to improve Growth 

Partners’ liquidity. Similarly, the reason Chatham’s notes were redeemed 

was to compensate Chatham for its agreement to pay $4 million to 

purchase CEOC stock—which even Apollo conceded was worthless—in 

order to help CEC renounce its obligations under the Bond Guarantees. 

d. Although the 2015 Notes were trading at a substantial discount to their 

face value, the Sponsors and CEC made no effort to negotiate the best 

price for their repurchase. Instead, CEOC was required to redeem the 

notes at par, plus a premium, plus accrued interest. This is in stark 

contrast to CEC’s earlier practice of always negotiating the best price 

when it repurchased CEOC’s distressed debt. Moreover, only seven 

months before—when the Sponsors and CEC capitalized Growth 

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Partners—those same notes had been valued at 68% of their face amount 

and CEOC’s financial condition had only deteriorated since then. 

e. $452 million went to buy 2015 Notes from Growth Partners, which had 

received them from CEC only eight months before. Originally, Growth 

Partners had agreed to put this money back into CEOC by participating in 

the B-7 financing. However, when the financing was oversubscribed, 

Growth Partners was relieved of this obligation and simply kept the 

money. The obvious purpose of this redemption was to move cash out of 

CEOC to protect it from claims of CEOC’s creditors. 

f. Over $400 million was paid to buy 2015 Notes from Chatham which, in 

turn, agreed to buy worthless CEOC stock from CEC. Chatham profited 

handsomely from this quid pro quo. 

L. CEOC BOARD APPROVAL OF THE 2014 TRANSACTION 

AGREEMENT AND THE B-7 TRANSACTION 

238. It is difficult to overstate the significance of the 2014 Transaction Agreement, the 

Four Properties Transaction, and the B-7 Transaction. At the end of the day, the transactions 

resulted in CEOC losing four of its remaining five destination properties; increasing its level of 

indebtedness; paying off over $750 million of bank loans that were not yet due and borrowing 

the money to do so at a substantially higher interest rate; redeeming over $1 billion of notes that 

were not yet due, and doing so at a substantial premium to the notes’ market value; repaying the 

balances on its intercompany revolver, which also were not yet due; paying $129 million in fees 

to GSO and BlackRock for a financing facility CEOC did not need; and dipping into its scarce 

cash reserves to find an additional $315 million to pay for it all. Obviously, CEC’s purpose was 

not to help CEOC. 

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239. Both transactions were approved on May 5, 2014 by CEOC’s two-man board. 

The two directors were Loveman and Hession, neither of whom was independent and both of 

whom were profoundly conflicted. Loveman was and remained CEC’s Chairman and Chief 

Executive Officer, and enjoyed an incentive plan that would reward him with CEC stock if the 

company succeeded. Hession was CEC’s Chief Financial Officer. Both Loveman and Hession 

also owned stock in CAC and, therefore, stood to benefit personally from the below-market price 

at which CEOC had sold the four properties to Growth Partners and from CEOC’s purchase of 

2015 Notes from Growth Partners at above-market prices. 

240. The CEOC board followed no processes at all. There was no effort to bring 

independent directors aboard to consider the transactions; no special committee of the board was 

considered or constituted; the CEOC board did not ask for or have independent financial or legal 

advisors; the board did not ask for or receive a fairness opinion on the transactions; and the board 

did not seem to be aware that it also was giving away 31 acres of prime undeveloped Las Vegas 

land. In fact, the CEOC board did not even bother to hold a meeting. Instead, Loveman and 

Hession signed a boilerplate “unanimous consent” approving the 2014 Transaction Agreement 

and another for the B-7 Transaction. The facsimile date stamps on Loveman’s copy of the 

consent indicate that only six minutes elapsed from the time he received the document until the 

time he faxed it back. 

241. The CEC board both convened a series of meetings and signed written consents to 

approve the 2014 Transaction Agreement and the B-7 Transaction. After the CEC board 

approved the 2014 Transaction Agreement on February 24, 2014, it met again on April 21, 2014 

to preliminarily approve the B-7 Transaction, and again on April 28, 2014 to give final approval 

for the B-7 Transaction and related financial transactions. Upon information and belief, 

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Defendants Bonderman, Davis, Kleisner, Loveman, Rowan and Sambur were in attendance on 

April 21, and Defendants Sambur, Kleisner, Loveman, and Rowan were in attendance on April 

28. On May 4, 2014, the CEC Executive Committee, comprised of Loveman, Rowan and Davis, 

executed a written consent approving the First Amendment to the 2014 Transaction Agreement. 

Finally, on May 19, 2014, Loveman signed a written consent on behalf of the CEC board 

approving the Amended & Restated CES LLC Agreement and the Omnibus Agreement. 

M. TRANSFER OF TOTAL REWARDS 

242. The 2014 Transaction Agreement also contemplated the creation of a new, CEOC 

bankruptcy remote entity that would assume control and dominion over CEOC’s most important 

intellectual property, including Total Rewards. The new joint venture, which was characterized 

as a “shared services company,” was a concept formulated by Apollo in late 2013 and was 

designed to keep Total Rewards out of the reach of CEOC’s creditors and to allow all Caesars 

entities, including Growth, CERP, and their subsidiaries, to have continued access to CEOC’s 

management services and intellectual property when CEOC entered bankruptcy. Paul Weiss and 

Apollo both actively participated in crafting the documents and agreements governing this shared 

services company and in implementing terms that were beneficial to CEC, Growth Partners, 

CERP, and the Sponsors at the expense of CEOC. The Sponsors did not share these underlying 

goals with anyone at CEOC. 

1. Creation of Caesars Enterprise Services LLC 

243. The new company was called Caesars Enterprise Services LLC (“CES”). CES 

was formed on May 20, 2014, pursuant to a limited liability company agreement (the “LLC 

Agreement”) among CEOC, CERP, and a wholly-owned, indirect subsidiary of Growth Partners 

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called Growth Properties.7 That same day, CEOC, CERP, and Growth Properties, as well as 

CES, Caesars License Company, LLC, and Caesars World, Inc., executed an “Omnibus License 

and Enterprise Services Agreement” (the “Omnibus Agreement” and, collectively with the LLC 

Agreement, the “Services LLC Agreements”). 

2. The Omnibus and Services LLC Agreements 

244. The Omnibus Agreement granted CES a “non-exclusive, irrevocable, world-wide, 

royalty-free license” to all of CEOC’s intellectual property, including Total Rewards. CES, in 

turn, sublicensed this intellectual property to CERP, Growth Partners, and other subsidiaries or 

affiliates of CEC. Effectively, this meant that CERP and Growth Partners obtained the nearly 

unlimited right to use—for a small fraction of its value—the Total Rewards software, database, 

know-how, algorithms, analytical tools, and accumulated knowledge that has made the Caesars 

system so successful for nearly 20 years. In return, CEOC received a 69% ownership stake in 

CES, but only one-third of the voting rights. CERP and Growth Properties shared the rest of 

CES’ equity and each had 33% of the voting rights. 

245. These Agreements contained a series of carefully drafted provisions that 

transferred effective control of Total Rewards to CERP and Growth Partners, enriching them at 

CEOC’s direct expense. These wide-ranging grants included the following: 

a. CES was governed by a three-person Steering Committee consisting of 

one member each from CEOC, Growth Properties, and CERP. Even 

though CERP and Growth Partners owned only 31% of CES, they had 

 

7

 The LLC Agreement referred to CEOC, CERP, and Growth Properties as the “Members” of 

the joint venture. Because Growth Properties was a wholly-owned indirect subsidiary of 

Growth Partners, CEC and others often referred to Growth Partners and Growth Properties 

interchangeably.

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two-thirds of the voting rights. Moreover, under the original LLC 

Agreement, CEOC would lose its governance rights if it filed for 

bankruptcy. 

b. Without the consent of Growth Partners and CERP, CEOC could not 

assign its interest in CES, withdraw from CES, monetize its interest in 

Total Rewards, or offer continued access to Total Rewards if it sold a 

casino to a third party. 

c. CEOC assigned to CES its rights to manage, maintain, protect, enforce, 

defend, license, and sublicense CEOC’s intellectual property. 

d. CEOC was compelled to transfer most of its employees to CES, thus 

removing management and operation of Total Rewards from CEOC 

altogether. 

e. The Omnibus Agreement granted three licenses to CES. The first, known 

as License A, was a sweeping grant of CEOC’s intellectual property to 

CES, including any intellectual property CEOC acquired down the road. 

License A explicitly granted a license to CES to create derivative works; 

thus, CEOC has no control over new versions or uses of its intellectual 

property that are created by CES, CERP, Growth Partners, or any other 

current or future sublicensees. 

f. CES granted irrevocable sublicenses to Growth Partners, CERP, and their 

subsidiaries and properties without CEOC’s consent and for no 

consideration. 

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g. Although CEOC technically will continue to own the intellectual property, 

CEOC has no right to possess the tangible subject matter developed in 

conjunction with, and instrumental to using, its intellectual property. 

h. In addition, it is now CES—not CEOC—that owns the know-how that is 

at the heart of the Total Rewards program. 

246. The effect of the CES Agreements is to take control of Total Rewards away from 

CEOC. This prevented CEOC from leveraging any of the value of Total Rewards to generate 

funds to operate the business or pay its debts. In return, CEOC received only a 69% equity share 

in CES, an entity that is intended to have very limited earnings and which CEOC does not and 

never will be able to control. 

3. Allocation of CES Expenses 

247. Ownership in CES was allocated among CEOC, CERP, and Growth Partners, 

with CEOC receiving 69% ownership, CERP 20.2% and Growth Partners 10.8%. Pursuant to 

the LLC agreement, costs were allocated 70% to CEOC and 30% to CERP and Growth Partners 

together. This allocation was intended to reflect the historical shares of the revenue each entity 

contributed to the Caesars enterprise. 

248. However, after the Four Properties Transaction closed in May 2014, CEOC’s 

share of this revenue declined to about 53%, while the share enjoyed by CERP and Growth 

Partners correspondingly increased. Nevertheless, the cost allocation method was not changed, 

resulting in CEOC paying more than its share of CES’ costs. It is estimated that, for the period 

June 2014 to December 2015, CEOC has overpaid the expenses of CES by roughly $14.5 million 

compared to its share of Caesars revenues in that period. 

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4. Lack of Fair Process 

249. The same lack of process that tainted the transfer of the Four Properties and the 

B-7 Transaction impugned the transfer of Total Rewards and the creation of CES. The 

negotiations over the sale of the asset was a negotiation only between CEC and CAC; CEOC did 

not have a seat at the table. CEC and CAC each formed a Special Committee, but neither 

Committee nor their advisors protected CEOC’s interests or negotiated on behalf of CEOC. 

Although each Special Committee hired independent financial and legal advisors to advise it on 

the entire transaction, CEOC had no independent directors, legal counsel, or financial advisors to 

review the transfer. CEOC did not ask for or receive a fairness opinion, and there was no 

analysis done by anyone of CEOC’s solvency. And, as with other CEOC asset transfers, Total 

Rewards was never offered to any true third-party buyers or subject to any marketing process to 

ensure that CEOC could get the best price. 

250. The CEC Special Committee does not seem to have considered the fact that CEC 

and CEOC had divergent interests or that the Committee itself had a fiduciary duty to protect 

CEOC because of CEOC’s insolvency. The Special Committee also never considered whether 

CEOC should retain control over Total Rewards, even though there would be obvious long-term 

consequences to CEOC if management of Total Rewards were transferred to entities the 

Sponsors controlled. 

251. The terms of the Services LLC Agreements were drafted by Paul Weiss and 

Apollo in early 2014, revised by TPG, and only presented to the CEC and CAC Special 

Committees after the terms had been decided upon. This process ensured that not even the CEC 

and CAC Special Committees could meaningfully weigh in on the transfer to a bankruptcy 

remote entity of a strategic and irreplaceable asset. Indeed, there were no material changes to the 

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term sheets after Paul Weiss and the Sponsors sent them to the Special Committees for their 

review and approval. 

252. At the time of the transfers, the only CEOC directors were Loveman and Hession, 

both of whom were senior executives at CEC and shareholders of CAC, Growth Partners’ parent. 

Loveman and Hession never convened a board meeting to discuss the transfer of Total Rewards, 

nor gave the subject any serious attention. Instead, they approved the transfer of “the key to the 

empire” in a simple written consent. 

5. Loss of Value 

253. Total Rewards had independent, standalone value even apart from the earnings 

boost it gave to the CERP and Growth Partners properties. One indicator of its worth is the 

valuation Caesars’ independent accountants, KPMG, performed of the Total Rewards trademark 

and customer relationships in a Purchase Price Allocation performed as part of the Sponsors buyout of Harrah’s in January 2008 (“2008 PPA”). According to the 2008 PPA, the fair value of the 

Total Rewards trademark alone was $495.1 million at the time of the sale. KPMG reasoned that 

the trademark was so valuable because “[t]he majority of Harrah’s trade names [including Total 

Rewards] are highly recognizable in the casino entertainment industry and carry a reputation for 

products and service, strong customer recognition, and positive consumer perception. These 

perceptions are supported by internal analyses we reviewed. As such, the trade names are 

valuable assets.” 

254. The PPA valued the Rated Customer Relationships within Total Rewards at 

approximately $1.455 billion. According to KPMG, “[r]ated player relationships represent a key 

intangible asset that has a separate and distinct value apart from both the purchased tangible 

assets and goodwill. Over time, Harrah’s has increased its name recognition and, cultivated 

relationships with rated players . . . through the Total Rewards program.” Like other assets, 

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these customer relationships were deemed to have a finite lifespan. As of December 31, 2014, 

the carrying value of the acquired customer relationships had depreciated to $529 million. 

Because this amount does not take into account any new customer relationships developed after 

the 2008 PPA, this $529 million value is the floor of the current accounting value of the 

customer relationships. There is no reason to think that the value of Total Rewards has fallen 

since KPMG performed its valuation, and there is every reason to believe that it has risen. Since 

2008, CEOC has invested enormous amounts in Total Rewards, expanded the program, and 

rolled out a new version of its software. Given these enhancements, the customer relationships 

CEOC has developed since 2008 are now worth hundreds of millions of dollars more than those 

identified in the 2008 PPA. 

6. Redemption of Total Rewards Credits 

255. CEOC also has been injured by CEC’s requirement that it use an unfair method to 

allocate costs when a customer redeemed Total Rewards credits. Total Rewards customer credits 

are allocated as an expense to the property where the credits were earned. Thus, CEOC 

shoulders the cost when customers from its regional casinos spend their credits in Las Vegas or 

New Orleans. Originally, this had little overall effect upon CEOC, since it owned these 

destination properties as well as the regional properties where the credits arose. However, after 

the loss of most of CEOC’s Las Vegas properties, this meant that CEOC has been bearing the 

costs of Total Rewards incentives without reaping the benefits. This has become, at bottom, 

simply another means of subsidizing CEC, CERP, and Growth Partners. 

N. TRANSFER OF CEOC’S PROPERTY MANAGEMENT BUSINESS, 

WORKFORCE, AND ENTERPRISE SERVICES 

256. A material source of CEOC’s income came from the fees it earned for managing 

its properties and, later, the CMBS and CERP properties. In connection with the Four Properties 

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Transaction, however, CEOC was compelled to assign its portfolio of property management 

agreements to CES, which took over the business. 

257. The property management contracts were unquestionably valuable. Upon 

information and belief, CEOC had earned many millions from managing Planet Hollywood and 

Horseshoe Baltimore for Growth Partners, and also should have earned substantial fees for 

managing the CMBS Properties and the CERP properties. Moreover, upon information and 

belief, the fees CEOC could have expected in future years from managing the properties would 

have amounted to hundreds of millions of dollars. Nevertheless, CEOC was paid virtually 

nothing by CES or anyone else for assigning its interests in these valuable contracts. Instead, 

CEOC was given a 69% equity interest (but only a one-third share of the voting interests) in 

CES, an entity that was intentionally structured to have no profits. 

258. As with the rest of the transactions in the spring of 2014, at no point did CEC, the 

Sponsors, CEC’s board or CEOC’s board consider whether CEOC was receiving, or should 

receive, reasonably equivalent consideration in return for the transfer of its property management 

business. Nor at any point in this period did CEOC have independent directors who would have 

been in a position to consider the fairness of these transactions to CEOC or have the benefit of 

any independent legal or financial advisors. Similarly, no fairness opinion was solicited, 

received, or considered in connection with any of these transfers. 

* * * 

259. In summary, under the 2014 Transaction Agreement and the resultant Four 

Properties Transaction and CES Agreements, CEOC (i) transferred four of its most valuable 

properties and undeveloped land to Growth Partners, (ii) gifted control of its most valuable 

intangible asset to CES, and (iii) was stripped of its property management contracts. As a result, 

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Growth Partners and CERP now effectively own most of the “hub” of the Caesars enterprise, 

leaving CEOC with the “spokes” that are located in deteriorating markets and that exist largely 

to feed profitable business to CERP and Growth Partners. 

260. The enormous transfer of value from CEOC to CAC and Growth Partners is 

reflected in the dramatic increase in the price of CAC’s publicly traded stock after the terms of 

the 2014 Transaction Agreement were disclosed. In the five trading days following the March 3, 

2014 announcement of the deal, CAC’s stock price increased 17.4%, from $13.63 to $16.00. 

During that same period, the stock prices of comparable gaming companies did not experience 

similar increases. Obviously, the market concluded that Growth Partners got more value than it 

had paid for. 

261. The 2014 Transaction Agreement not only was made while CEOC was insolvent, 

but also further deepened CEOC’s insolvency. The announcement of the 2014 Transaction 

Agreement led to the immediate downgrade of CEOC’s credit rating. On March 28, 2014, 

Moody’s lowered CEOC’s credit rating to Caa3 and of the Second-Lien Notes from Caa3 to Ca. 

Moody’s wrote: 

The proposed sale comes on the heels of the sale of Planet Hollywood, sale of its 

interest in a casino development in Baltimore, and the sale of Octavius Tower and 

Project Linq in Las Vegas, NV in late 2013. Moody’s estimates that on a 

pro-forma basis, the proposed sale of the four casinos along with the previous sale 

of Planet Hollywood will reduce CEOC’s annual EBITDA (which included 

Planet Hollywood for three quarters) in the range of $250 - $300 million, 

representing about 21% of CEOC’s 2013 adjusted EBITDA. As a result, 

debt/EBITDA will rise above the estimated 16x at year-end 2013. Additionally, 

assuming an 8x multiple for valuation purposes, Moody’s estimates bondholders 

will lose value in the range of $2.0 billion to $2.4 billion. 

https://www.moodys.com/research/Moodys-takes-rating-actions-on-several-entities-in-theCaesars–PR_295963. On April 8, 2014, Standard & Poor’s followed suit, lowering its recovery 

rating on CEOC’s first lien debt to “3” (50% to 70% recovery) and its issue-level rating to CCC. 

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O. PURPORTED RELEASE OF THE BOND GUARANTEES 

262. Another element in the transactions the Sponsors and CEC engineered in these 

months was an effort to purport to release—for no consideration—the guarantees CEC made of 

$14.75 billion of CEOC’s debt to bondholders and noteholders (the “Bond Guarantees”). 

Among other things, the Bond Guarantees disincentivized CEC from stripping CEOC of assets, 

since the guarantees kept CEC on the hook for the repayment of CEOC’s debts. 

263. CEC’s guarantees of CEOC’s debt were plainly set forth in the bond indentures, 

which themselves were carefully-written, sophisticated legal documents that followed decades of 

precedent. The indentures specified methods by which the CEC guarantees could be released. 

In addition, certain of the methods for releasing the guarantees required an affirmative election 

by CEOC itself. 

1. CEC’s Sale of CEOC Stock. 

264. On May 5, 2014, CEC sold a 5% of its equity. The CEOC stock was worthless. 

CEC’s financial advisor, Blackstone, determined that, if traditional valuation methods were used, 

CEOC stock had a negative value. And even Apollo’s Sambur equated the shares’ value to 

“pixie dust.” 

265. Sambur solved this problem, in part, by turning to two hedge funds that already 

owned stock in CEC. One was Paulson & Co., which owned 9.9% of the common voting stock 

of CEC pursuant to a debt-for-equity swap it had closed a few years before. The second was 

Scoggin LLC. Even though the CEOC stock was worthless, both Paulson and Scoggin were 

willing to buy it because, on information and belief, Sambur had disclosed to them his plan to 

use the stock sale as a mechanism to attempt to release CEC’s bond guarantees. Once the Bond 

Guarantees were purportedly released, the potential liability would disappear and CEC’s stock 

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price would increase, more than compensating Paulson and Scoggin for the cost of the worthless 

CEOC stock. 

2. Apollo’s Side Deal with Chatham Asset Management 

266. Sambur also began negotiations with a third possible buyer of the CEOC stock, 

Chatham Asset Management, a New Jersey-based asset manager with whom he had previous 

dealings and was in frequent contact. Unlike Paulson and Scoggin, Chatham did not own CEC 

stock. However, Chatham had accumulated a substantial position in CEOC’s 2015 Notes. 

267. Chatham also was a member of the syndicate that loaned money to Growth 

Partners in connection with the Four Properties Transaction in 2014. On information and belief, 

at some point, someone told Chatham about the Sponsors’ strategy to strip profitable assets out 

of CEOC and place them in entities that the Sponsors and CEC themselves owned and 

controlled. A February 11, 2014 email from Greg Roselli (a Chatham analyst), for example, 

described Apollo’s overarching strategy as causing “the new spin-off company ... to start 

picking the best properties out of Opco to help force the lenders to take a haircut.” A March 3 

internal Chatham e-mail from Roselli to Chatham portfolio manager Evan Ratner described the 

planned “Four Properties” transaction as a sale that “[e]xtends the liquidity profile but doesn’t 

change the story for the 2nds in the long run; and they’ve stripped the best assets....” 

268. This should have worried Chatham, which was a major holder of the very debt 

that Apollo was trying to debase. Instead, upon learning of Apollo’s plans, Chatham steadily 

increased the amount of the 2015 Notes it held. In January 2014, Chatham owned $264.8 

million in principal of the Notes. By May 1, 2014, Chatham had upped its holdings of Notes to 

over $400 million in principal. Upon information and belief, the majority of these new holdings 

were purchased on April 29 and 30, 2014. 

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269. Upon information and belief, the reason for this increase was that Chatham and 

Sambur were discussing a proposal under which the Sponsors would have CEOC redeem the 

2015 Notes as a means of shifting cash to Growth Partners. 

270. Consistent with those discussions, Apollo did, in fact, arrange a secured financing 

to raise money to buy the 2015 Notes held by Chatham. Although Sambur had previously 

bought CEOC’s distressed debt only at a discount, in the B-7 Transaction, he had CEOC pay par, 

plus a premium, for the 2015 Notes. Finally, this was indeed a device to get cash into CAC’s 

subsidiary Growth Partners. 

271. As the B-7 Transaction took form, another element of Apollo’s quid pro quo with 

Chatham became apparent. Although Chatham had no reason to purchase the worthless CEOC 

stock from CEC, it became the biggest buyer of that stock—paying about $4 million for twothirds of the CEOC stock being sold. Chatham, of course, lost money on the stock purchase 

given CEOC’s insolvency and defendants’ scheme to strip valuable assets from CEOC. 

272. However, Chatham was rewarded for participating in the scheme. Under the Note 

Purchase Agreement that Apollo negotiated with Chatham, at the same time that it negotiated the 

CEOC stock purchase, CEOC spent $412 million to purchase $435 million in principal amount 

of Chatham’s 2015 Notes at a premium and with accrued interest. 

273. Chatham, Paulson, and Scoggin paid CEC $6.1 million for the CEOC stock. 

Even though the stock was all but worthless, each of the three funds profited handsomely. In the 

hours after CEC announced its claim that the Bond Guarantees had been removed, their CEC 

stock rose 14%, while CEOC’s 9% Senior Secured Notes due 2020 fell 10%. 

3. Purported Removal of CEC’s Bond Guarantees 

274. CEOC, of course, received nothing from the proceeds of the stock sale. 

Nevertheless, on or about June 2, 2014, CEOC CFO Donald Colvin delivered to the indenture 

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trustee for the 2009 indenture a certificate stating that CEOC “elects to automatically release the 

Parent Guarantee pursuant to the last paragraph of Section 12.02(c) of the 2009 Indenture.” On 

information and belief, similar certificates also were delivered to the indenture trustees for the 

other indentures governing the Second Priority Notes. 

275. CEOC received no benefits from the transaction. It received no consideration in 

return for delivering this certificate and releasing its legal rights. However, CEOC’s purported 

exercises of its elections under the Bond Guarantees were unquestionably valuable, a fact proven 

by the jump in CEC’s stock price when the purported removal of the Bond Guarantees was 

announced. 

276. As usual, upon information and belief, CEOC followed no governance process in 

its decision to relinquish this asset. It did not have independent legal or financial advisors, 

independent directors, or an independent committee of its board, and it did not ask for or receive 

a fairness opinion or other valuation of the asset. Nor does it appear that its board ever 

considered or approved of CEOC’s election to remove the Bond Guarantees. 

P. INTERCOMPANY REVOLVER 

277. In August 2008, CEC extended CEOC an unsecured credit facility called the 

Intercompany Revolver under which CEC would lend money to CEOC up to a maximum 

principal amount of $200 million. The maturity date of the Intercompany Revolver was January 

29, 2014, which later was extended to November 2017. 

278. Apollo, not CEC or CEOC, governed the use of the Revolver. CEOC followed 

the practice of notifying Apollo of its use of the Intercompany Revolver, and Apollo monitored 

CEOC’s borrowings and repayments under the facility. At all relevant times, Apollo was aware 

of and controlled CEOC’s use of the Intercompany Revolver, including decisions to repay 

amounts owing under the Revolver. 

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279. In December 2010, the Intercompany Revolver was amended to increase its 

maximum principal amount to $500 million. The facility was increased again in February 2011. 

In November 2012, the Intercompany Revolver was amended and increased to $1 billion. 

However, at the same time, the Revolver was changed from a committed facility to an 

uncommitted facility. Moreover, under the amendment, CEOC now was required to make 

solvency representations to request funds, something that—as CEC and Apollo well knew—it 

would not be able to do. 

280. Between November 2012 and May 2014, CEOC repaid CEC principal and 

interest totaling $400.7 million. These repayments occurred at the very time the Growth 

Transaction was being developed to allow CEOC to obtain much needed liquidity by selling 

assets to CEC affiliates. CEC used $320 million of this to benefit CEC’s CMBS Properties, 

either by repurchasing CMBS Debt in the market at a discount or by providing necessary cage 

cash to CMBS Properties. After CEOC received the proceeds from the Four Properties 

Transaction, the Sponsors—led by Sambur—instructed CEOC to repay all amounts remaining 

under the Intercompany Revolver. On May 30, 2014, CEOC’s board complied with this 

instruction and approved the repayment of the $261.8 million outstanding on the Revolver. 

281. Altogether, CEOC borrowed, and repaid, about $1.8 billion under the facility over 

the years, as well as $47 million in interest. Of this, CEOC made $289.0 million in payments of 

principal and interest to CEC in the year prior to its Petition Date and $546.5 million in the two 

years before the Petition Date. The maximum outstanding balance on the Intercompany 

Revolver was $644.2 million, which was reached on November 14, 2012. CEOC paid 

$18.3 million in interest with respect to that balance. 

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Q. NEW YORK LAWSUIT 

282. In June and July 2014, CEOC brought aboard two independent directors who 

selected the law firm of Kirkland & Ellis LLP as CEOC’s restructuring counsel. The two 

independent directors also formed a Special Governance Committee (“SGC”) of the CEOC 

Board. The SGC, assisted by Kirkland to provide legal advice and Mesirow Financial 

Consulting to provide financial advice, began investigating the various asset transfers and other 

transactions, in part to determine what claims CEOC had against the Sponsors, CEC, directors of 

CEC and CEOC, and others and the value of such claims. 

283. Simultaneously, the persons and entities whom the SGC was charged with 

investigating began devising a means of defeating the SGC’s work before it even started. CEC 

counsel prepared a declaratory judgment complaint for CEC and CEOC to file that sought a 

declaration that CEC and CEOC were not liable for fraudulent transfers or breaches of fiduciary 

duty. 

284. The decision whether to file the case went before the boards of CEC and CEOC 

on August 3, 2014. The two boards were largely interlocking, and their meetings were held in 

quick succession that evening. The CEC Board first approved it. Shortly thereafter, the same 

individuals who had just approved it on behalf of CEC approved the filing of the complaint as 

CEOC directors. The CEOC board meeting was a mere formality, held over the phone and 

lasting only 13 minutes. Because they were just beginning their investigation and did not know 

the facts yet, the two independent directors SGC abstained. Instead, the filing of the lawsuit was 

approved by Rowan, Sambur, Loveman and Davis, each one of whom was also a director of 

CEC, a partner or officer of Apollo or TPG, and a putative defendant, and thus completely 

conflicted. 

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285. The declaratory relief sought by the lawsuit was intended to prevent CEOC’s 

newly-formed SGC from conducting a meaningful investigation, since a main purpose of the 

lawsuit was to obtain a declaration that CEC was not liable to CEOC for the very transactions 

that the SGC was directed to investigate. 

286. The suit was filed in New York state court on the morning of August 5, 2014 on 

behalf of CEC and CEOC. The complaint’s prayer for relief, among other things, asked for “[a] 

judicial declaration stating that . . . plaintiffs have not breached their fiduciary duties or engaged 

in fraudulent transfers, or otherwise engaged in any violation of law.” On September 15, 2014, 

an amended complaint was filed repeating the prayer for this same relief. 

R. PIK NOTES TRANSACTION 

287. On February 1, 2008, CEOC issued about $18 million of so-called PIK or 

“toggle” notes, under which CEOC had the option of paying interest either in cash or in kind 

until the notes matured in 2018. 

288. CEC had guaranteed the PIK Notes. By late 2014, CEOC was in default, and 

noteholders were threatening to sue CEC on its guarantee. Even worse from CEC’s point of 

view was the fact that CEC’s guarantee of the notes was a guarantee of payment, and not of 

collection. The previous June, CEC had negotiated an amendment to its credit agreement with 

bank lenders changing the Bank Guarantee from a guarantee of payment to a guarantee of 

collection; however, that amendment had a “most favored nations” clause that would have given 

the banks the benefit of any form of guarantee CEC provided to anyone else that was more 

favorable than the guarantee of collection CEC had just negotiated with them. Thus, if CEC 

were required to pay the holders of the PIK Notes under its guarantee of payment, it would 

trigger the most favored nations clause and CEC’s Bank Guarantee would once again be one of 

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payment, not collection. Since CEOC was on the verge of filing its bankruptcy petition, this put 

CEC in immediate jeopardy. 

289. CEC once again decided to help itself to CEOC’s assets. Despite the fact that the 

PIK Notes were trading at a fraction of their face value, CEC directed CEOC to redeem the 

Notes at 103.583% of par. CEOC had, by then, independent directors and its board had formed 

the Special Governance Committee to address self-dealing transactions. Yet the SGC and its two 

members were ignored. Instead, on October 2, 2014, the CEOC board’s Executive Committee, 

which consisted of Rowan, Davis and Loveman, approved the redemption of the PIK Notes. 

290. The redemption was a windfall to holders of the PIK Notes. CEOC was 

obviously insolvent, and it was widely known that CEOC was preparing for bankruptcy. (In fact, 

one provision of the note purchase agreement that was drawn up between CEOC and the 

noteholders stipulated that the noteholders would be paid directly by the indenture trustee and 

paid before the expiration of the indenture’s 30-day waiting period to avoid the Bankruptcy 

Code’s 90-day preference period.) Thus, since the notes were not due until 2018, a purpose of 

the redemption was to protect CEC from the implications of its Bank Guarantees. 

291. The notes were redeemed at a 627% premium over the market value on the 

redemption date. CEC itself participated in this windfall. It owned $4.3 million in face amount 

of the PIK Notes, and it received $4.7 million when its notes were redeemed. 

292. Although CEOC had independent directors and a SGC to address issues such as 

this, the process was completely ignored. There was no fair process. The three members of 

CEOC’s executive committee who approved the redemption all were also directors of CEC. In 

voting to redeem the PIK Notes above par, they did not bother to investigate the prices at which 

the notes had been trading. No independent legal or financial advisers were engaged to guide the 

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Executive Committee’s deliberations, and there was no opinion rendered that the transaction was 

fair to CEOC in any way. Altogether, CEOC paid $17.7 million to redeem the PIK Notes. 

S. PREEMPTION OF THE RESTRUCTURING PROCESS 

293. The campaign of asset transfers and intentional encumbrance of CEOC’s business 

was undertaken by the Sponsors and CEC for the admitted purpose of strengthening their 

leverage over CEOC’s creditors. The cumulative effect of the transfers was to spread Caesars’ 

synergies among CEC, CAC, Growth Partners, CERP, CIE, CES, and other affiliates in order to 

impede any effort by creditors to remedy the numerous fraudulent transfers. These efforts also 

created certain risks to formulating a plan of reorganization (in addition to structural issues that 

already existed) that would allow CEOC to emerge from chapter 11 as a standalone entity. 

294. The separation of the Debtors from the Caesars enterprise would be a significant 

undertaking. Currently, substantially all of the Debtors’ non-property-based “back office” and 

corporate-level support services, such as IT, legal, human resources, accounting, and finance, are 

provided by personnel employed by CES and through services governed by agreements with 

CES. CES also employs CEOC’s senior property management team. Under a standalone plan, 

the Debtors would need to establish their own fully-independent back-office, property 

management, and corporate -level support and management teams to provide services 

comparable to those provided by CES. 

295. The Debtors would own Total Rewards under a standalone plan as they own 

substantially all of the intellectual property associated with Total Rewards. But as explained in 

the Debtors’ disclosure statement, CERP and Growth Partners would be competitors with their 

own rewards programs: 

[A proposed] Standalone Plan assumes that Total Rewards will become a 

“CEOC-only” rewards program, with participation from casinos owned by CERP 

and CGP terminated as of the Effective Date. In addition to transition and 

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potential litigation costs associated with terminating CGP and CERP’s access to 

the Total Rewards program, the Debtors anticipate that CGP and CERP properties 

will either develop their own customer loyalty program or affiliate with an 

alternative existing program to compete with the Debtors and that the Debtors’ 

customers will no longer earn Total Rewards credits at CGP or CERP properties. 

The result will be incremental gross margin compression, particularly in the 

Las Vegas market, as CEOC and non-CEOC properties compete for existing Total 

Rewards customers and spend more on marketing to these customers. 

The Disclosure Statement further stated: “As the Total Rewards network shrinks in Las Vegas 

and Atlantic City in the Standalone Plan scenario, the options available to the Debtors’ 

customers to leverage Total Rewards benefits (earning and redeeming) are also reduced.” 

296. With respect to payroll costs, the Debtors forecast that CEOC’s regionally 

focused operations under a standalone plan would require more senior-level full-time employees 

than CEOC’s current allocation of such payroll expenses under CES and might need to pay 

slightly higher salaries to attract and retain a similar caliber management team, now that the 

organization will be primarily regionally focused. There are also a number of anticipated onetime costs in connection with the separation of the Debtors from the rest of the existing Caesars 

enterprise, including costs related to employee retention, asset purchases from CES related to 

corporate services infrastructure, legal and consulting costs, and likely disruptions during the 

transition period adversely impacting business performance. 

CAUSES OF ACTION 

297. Plaintiffs have been injured by defendants’ wrongful conduct. This includes 

injury that is irreparable and which can only be remedied by the return of assets that were 

wrongfully taken. In addition, plaintiffs are entitled to money damages. 

298. Defendants’ wrongful conduct includes constructive and actual fraudulent 

transfers, waste of corporate assets, breaches of fiduciary duties, aiding & abetting breaches of 

fiduciary duties, and conspiracy. These are alleged below in plaintiffs’ specific claims against 

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defendants. Certain elements of defendants’ wrongful conduct, though, are common to many of 

these claims. 

CEC’s Breach of Fiduciary Duty 

299. CEOC was a wholly-owned subsidiary of CEC at all times until May and June 

2014, when 11% of CEC’s stock in CEOC was sold or transferred to others as part of the scheme 

by the Sponsors and CEC to purportedly release CEC from its Bond Guarantees. At all times, 

CEC dominated the affairs of CEOC and appointed every member of CEOC’s board, and, at all 

relevant times, CEOC was insolvent. As a result, CEC owed fiduciary duties to CEOC to 

maximize CEOC’s value. 

300. As a fiduciary to CEOC, CEC was required to place the interests of CEOC ahead 

of CEC’s own interests and to not engage in conduct that benefited CEC to the detriment of 

CEOC. 

301. In addition, because CEC itself was dominated and controlled by the Sponsors, 

CEC was required to place the interests of CEOC ahead of the Sponsors’ interests and to not 

engage in conduct that benefited the Sponsors to the detriment of CEOC. 

302. As a fiduciary to an insolvent CEOC, CEC was required to avoid self-dealing 

transactions with respect to CEOC, unless those transactions met the standard of entire fairness. 

The standard of entire fairness required that any self-dealing transaction between CEC and 

CEOC must be entirely fair to CEOC as to price and also entirely fair to CEOC as to the process 

followed in timing, initiating, structuring, negotiating, and disclosing the transaction and in 

obtaining approval of the transaction by CEOC’s directors. 

303. It was not possible for a self-dealing transaction between CEC and CEOC to be 

fair as to process unless, among other things, CEOC had the benefit of independent governance 

and advice. This meant, among other things, that CEOC was required to have independent 

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directors on its board, to have independent financial advisors, to have independent legal counsel, 

and to be fully informed of the price, terms, and conditions of any transaction between CEC and 

CEOC. In addition, it required that CEOC have the opportunity to study and review all aspects 

of any transaction between CEC and CEOC. 

304. Throughout this period, CEC deprived CEOC of these basic safeguards. At no 

point until June 2014 did CEC appoint any independent director to the CEOC board; instead, the 

CEOC board consisted at all times of Gary Loveman – CEC’s Chairman and CEO – and a senior 

CEC officer. Similarly, throughout this period, CEC did nothing to ensure that CEOC had 

independent financial or legal advisors and, in fact, proceeded to negotiate, structure, and 

execute transfers of CEOC assets with full knowledge that CEOC did not have independent 

advisors. Finally, CEOC often was excluded from negotiations about the transfer of CEOC 

assets; learned of the prices, terms, and conditions of the transfers only after the negotiations had 

been completed; and was given no time or opportunity to critically review those prices, terms, 

and conditions. As a result, all of these transfers were unfair to CEOC as to process. 

Breaches of Fiduciary Duties by the Conflicted Directors of CEC 

305. Although it would have been possible for CEOC to have had a functioning board 

at this time, defendants Loveman, Rowan, Sambur, Bonderman, and Davis (collectively, the 

“CEC Conflicted Directors”) decided to prevent that from happening. Instead, the CEC 

Conflicted Directors determined that Loveman and another CEC officer, both beholden to the 

CEC board, would be CEOC’s sole board members. 

306. The CEC Conflicted Directors also acted as the directors-in-fact of CEOC. 

Among other things, they determined which assets CEOC would sell, and to whom CEOC would 

sell them; they handled the negotiations of the sale by themselves, without the involvement of 

CEOC management; they decided the timing, price, terms, and conditions of each sale; they 

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decided which financial and legal advisors would be called upon to assist in the transactions and, 

conversely, decided that CEOC would have no independent advisors of its own; they reviewed 

and approved the transactions at their own board meetings; and they relegated the CEOC board 

to a role of rubber-stamping the decisions the CEC board already had made. 

307. The CEC Conflicted Directors intentionally and systematically supplanted the 

CEOC board so that they could implement, unimpeded, their plan to take valuable assets from 

CEOC and put them beyond the reach of CEOC’s creditors. In preempting the responsibilities 

and authority of the CEOC board, the CEC Conflicted Directors also succeeded to the fiduciary 

duties of that board. As a result, the CEC Conflicted Directors each had a fiduciary duty to avoid 

self-dealing transactions with an insolvent CEOC that were not entirely fair to CEOC as to price 

and process. 

308. In addition, the CEC Conflicted Directors treated CEC and CEOC as one and the 

same company. This is shown by the fact that, throughout the relevant period, CEC did not 

appoint independent directors to the CEC board; CEOC did not have a special committee of its 

board to consider or approve the transactions; CEC was represented by the same law firm that 

represented CEOC; CEC and CEOC used the same financial advisers; and CEC and CEOC often 

held joint board meetings. There was, therefore, only one true board and it was CEC’s board; 

thus, every member of that board had a fiduciary duty to the entire enterprise. This included a 

fiduciary duty to avoid self-dealing transactions with CEOC that did not meet the standard of 

entire fairness. 

309. Furthermore, given CEOC’s insolvency and their domination and control over 

CEOC and its board, the CEC Conflicted Directors owed fiduciary duties to maximize CEOC’s 

value. 

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310. As a result, the breaches of fiduciary duties complained of in this Complaint also 

were breaches of fiduciary duty by the directors of CEC. 

311. In the alternative, by directing and knowingly participating in breaches of 

fiduciary by CEC and CEOC’s directors and officers, the CEC Conflicted Directors are liable for 

aiding and abetting breaches of fiduciary duties owed to CEOC. 

Liability of Apollo and TPG 

312. Apollo and TPG each are liable for breaches of fiduciary duties by CEC and by 

the CEC Conflicted Directors, who were their agents. Through Hamlet, Apollo and TPG owned 

the majority of the stock of CEC and had the right to – and did – appoint CEC’s entire board. 

313. Because the Apollo and TPG partners or officers who served on the CEC board 

did so for the benefit of and to further the interests of Apollo, TPG and Hamlet, they were agents 

of Apollo, TPG and Hamlet, and Apollo, TPG and Hamlet are liable for their conduct. 

314. Similarly, individual partners or officers of Apollo, TPG and Hamlet took 

affirmative steps to aid and abet breaches of fiduciary duties by CEC, CEOC, and their directors. 

The Sponsors are thus liable for this conduct of their agents as well. 

Breaches of Fiduciary Duty By CEOC Directors 

315. CEOC’s directors owed fiduciary duties to CEOC. Because CEOC was insolvent, 

CEOC’s directors had a duty to maximize CEOC’s value. However, at all relevant times, the 

directors of CEOC were conflicted and did not exercise independent judgment. Until late June 

2014, CEOC’s board consisted of two directors. One was Gary Loveman, who also was 

chairman and CEO of CEC. The other was either Jonathan Halkyard, Michael Cohen, or Eric 

Hession, each of whom was, during his time of service on the CEOC board, an officer of CEC. 

316. CEOC’s directors owed fiduciary duties to CEOC. This included both a duty of 

loyalty and a duty of care. 

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317. The duty of loyalty required the directors to avoid self-dealing transactions with 

respect to an insolvent CEOC, unless those transactions met the standard of entire fairness. As 

set forth herein, CEOC’s directors breached their duty of loyalty by approving self-dealing 

transactions between CEC and CEOC that were not entirely fair to CEOC. In addition, CEOC’s 

directors breached their fiduciary duties by approving transactions in which they had a personal 

interest and by participating in a process that was incapable of being a fair process. 

318. The duty of care required CEOC’s directors to apprise themselves of all 

information relevant to their decisions and to carefully and critically consider that information. 

CEOC’s directors breached that duty of care by failing to have sufficient knowledge of the 

matters they approved; by approving the price, terms, and conditions of transfers without having 

the benefit of independent financial and legal advice; by approving transactions without 

receiving fairness opinions and without conducting an analysis of CEOC’s solvency; by failing 

to hold board meetings or by having meetings that were mere formalities; and by failing to assure 

that certain transfers of CEOC assets were even brought to the board for approval. 

Liability for Aiding & Abetting Breaches of Fiduciary Duties 

319. In addition to breaching the fiduciary duties that they directly owed to CEOC, the 

CEC Conflicted Directors, the Sponsors, and the Sponsors’ officers and agents aided and abetted 

others in breaching fiduciary duties owed to CEOC. These individuals and entities did so with 

knowledge that CEOC was owed fiduciary duties by its directors and, because CEOC was 

insolvent, that CEOC also was owed fiduciary duties by CEC and CEC’s directors. These 

defendants also had knowledge that those fiduciary duties were being breached by the 

transactions, transfers and actions described in this Complaint. Because CEOC was injured by 

the participation of these individuals and entities in breaches of fiduciary duties, these defendants 

are liable to CEOC as aiders and abettors. 

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Civil Conspiracy 

320. The essential elements of a civil conspiracy are (a) an agreement between two or 

more persons to do an unlawful act; (b) intentional participation in the plan or purpose; (c) an 

overt act in furtherance of the conspiracy; and (d) causation and damages. 

321. As set forth above, the Conflicted Directors, a core group of individuals who sat 

on the boards of CEC and/or CEOC, who were affiliated with CEC and the Sponsors, and who 

were bound together by overlapping corporate positions and shared financial interests, controlled 

every significant aspect of Caesars’ overall strategic direction. 

322. By no later than mid-2012, the Conflicted Directors realized that CEOC was 

insolvent and would never be able to repay its debts at anything close to face value. At that time, 

the Conflicted Directors agreed and conspired on a multi-step scheme to strip CEOC of valuable 

assets and otherwise position CEC and the Sponsors for CEOC’s inevitable restructuring or 

bankruptcy. The Conflicted Directors agreed and conspired to commit unlawful acts, including 

to fraudulently transfer CEOC’s valuable assets, breach fiduciary duties owed to CEOC, engage 

CEOC in harmful financial transactions, and otherwise delay, hinder, and defraud CEOC and its 

creditors. The Conflicted Directors intentionally participated in the scheme. 

323. The Conflicted Directors performed numerous overt acts designed to further and 

carry out their conspiracy. Those overt acts include a number of the transactions and transfers 

complained of in this suit, including the Linq and Octavius transfers; the transfer of 

Planet Hollywood and Horseshoe Baltimore; the transfer of Bally’s Las Vegas, The Cromwell, 

The Quad and Harrah’s New Orleans; the transfer of undeveloped land in Las Vegas; the 

Transfer of Total Rewards; the transfer of CEOC’s property management business; the B-7 

Transaction; and the purported release of CEC’s Bond Guarantees. The overt acts also include 

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independent actions taken in connection with creating, structuring, negotiating, evaluating, and 

approving the aforementioned transactions and transfers, as more fully detailed herein. 

CLAIM I 

TRANSFER OF CEOC’S ONLINE GAMING BUSINESS 

(Nev. Rev. Stat. §§ 112.180, 112.190, 112.210; 6 Del. C. §§ 1304, 1305, 1307; and 

11 U.S.C. §§ 544, 550) 

(Fraudulent Transfer, Breach Of Fiduciary Duty, 

Aiding & Abetting Breach Of Fiduciary Duty)

2009 Transferees, CEC, Sponsors, 

CEC Conflicted Directors, Loveman, Benjamin, Peterson, Press, Swann, and Williams 

324. Plaintiffs repeat and reallege paragraphs 1 through 323. 

Fraudulent Transfer 

325. At all relevant times, CEOC has been insolvent. 

326. The Internal Revenue Services (“IRS”) held claims against the Debtors at the time 

of the LBO on January 28, 2008 and on the Petition Date. Thus, the Debtors are able to step into 

the shoes of the IRS for purposes of fraudulent transfer claims and to avoid the transactions or 

obligations for the benefit of all creditors, including the transfers to the 2009 Transferees. 

327. Throughout the relevant period, CEC, the directors of CEC, and the Sponsors 

completely dominated and controlled CEOC and all of CEOC’s subsidiaries and affiliates. 

328. In 2009, one of CEOC’s promising corporate opportunities was the development 

and expansion of its online gaming business. As set forth in detail above, it was clear in 2009 

that online gaming was a logical extension of CEOC’s existing business and CEOC already was 

well-positioned in the online gaming market. 

329. On April 30, 2009, CEC formed defendant Caesars Interactive Entertainment, 

then known as a Harrah’s Interactive Entertainment, as a subsidiary of CEC. The next day CEC 

directed CEOC to transfer CEOC’s ownership of the World Series of Poker trademark, related 

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intellectual property, and all of its existing sponsorship, media, and licensing contracts to a 

CEC-owned holding company (HIE Holdings TopCo), which then transferred them to an 

intermediate holding company (HIE Holdings), which in turn transferred them to Harrah’s 

Interactive Entertainment. This constituted a wholesale transfer of CEOC’s online gaming assets 

and online gaming business. 

330. CEOC received preferred securities of TopCo in exchange for this transfer. 

Although nominally valued at $15 million, the TopCo securities were worth much less. 

331. The assets CEOC transferred to TopCo were worth over $60 million. 

332. In addition, the corporate opportunity that CEC and the 2009 Transferees usurped 

and CEOC forewent exceeded $1 billion in value at a time when CEOC was insolvent. 

333. The transfer of CEOC’s online gaming assets and business was a constructive 

fraudulent transfer because CEOC received inadequate consideration and less than reasonably 

equivalent value for them. 

334. In addition, the transfer of CEOC’s online gaming assets and business was an 

actual fraudulent transfer because the purpose and effect of the transfers was to hinder or delay 

CEOC’s creditors by placing critical and valuable assets beyond their reach. Evidence of 

fraudulent intent includes the facts that: 

a. the Sponsors, and Apollo in particular, conceived of the transaction and 

identified the assets to be transferred; 

b. the transaction was designed and intended to allow CEC and the Sponsors 

to take control of CEOC’s online assets that were thought to have 

significant potential, transfer those assets beyond the reach of CEOC’s 

creditors, and otherwise better position CEC and the Sponsors in CEOC’s 

restructuring or bankruptcy; 

c. CEOC, CEC, the Sponsors, the 2009 Transferees, and the individual 

defendants knew that CEOC was insolvent on and after the date of each 

transfer, as shown, inter alia, by the fact that the CEC board was explicitly 

advised of the legal definition of insolvency in conjunction with this 

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transfer and that Caesars’ long-range plans predicted that CEOC would 

have substantially negative free cash flows for the foreseeable future; 

d. despite their knowledge that CEC and CEOC had divergent interests, 

CEC, the Sponsors, and the 2009 Transferees proposed, negotiated, 

structured, evaluated, and approved the transfers through a process that 

failed to involve CEOC or protect its interests; 

e. the transfers were to newly created affiliates of CEC, owned and 

controlled by the Sponsors and CEC; 

f. CEC formed CIE as a subsidiary of CEC rather than CEOC for the express 

purpose of exploiting the valuable online gaming business that CEOC had 

created; 

g. CEC and the Sponsors retained control and ownership of the assets; 

h. the price for CEOC’s online gaming business and assets was not 

negotiated and was instead determined by the Sponsors; 

i. the value of the consideration received by CEOC was not reasonably 

equivalent to the value of the assets transferred; 

j. the transfer substantially impaired CEOC’s future ability to service its 

debt; 

k. the Sponsors and CEC retained Duff & Phelps to value the assets and 

decided upon the deal structure; 

l. the fairness opinion rendered by Duff & Phelps relied upon inconsistent 

projections that were performed by an interested party and were not made 

in the ordinary course of business; 

m. the fairness opinion rendered by Duff & Phelps did not consider the future 

upside potential of the assets transferred; and 

n. the CEOC board approved the transfer without giving it serious or critical 

consideration. 

335. The transfer of CEOC’s online gaming assets and business is avoidable and 

recoverable, and the 2009 Transferees are liable based upon the constructive and actual 

fraudulent transfer of CEOC’s online gaming assets and business. 

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Breaches Of Fiduciary Duty By CEC And CEC’s Directors 

336. At the time of the transfers of CEOC’s online gaming assets and business, the 

2009 Transferees were direct or indirect subsidiaries or affiliates of CEC. Thus, the transfer of 

CEOC’s online gaming assets and business to the 2009 Transferees was a related party 

transaction and involved self-dealing. 

337. The price paid to CEOC for transferring the assets was far below the value of 

those assets and was not entirely fair to CEOC. 

338. The process by which CEC initiated, structured, negotiated, and disclosed the 

transaction was not entirely fair to CEOC. CEOC was given no say in deciding whether to sell 

these assets, how the transaction was structured, or when and how it was disclosed. CEOC had 

no role in the negotiations of the transaction and was not even represented in the negotiations. 

CEC used its dominance and control over CEOC to ensure that CEOC lacked independent 

directors, financial advisors, and legal counsel necessary to fairly evaluate the transaction and 

proposed the transaction to CEOC knowing that CEOC lacked the independent governance or 

resources to fairly evaluate the transaction. 

339. Online gaming was an important corporate opportunity for CEOC. The transfer 

of CEOC’s online gaming assets and business took this opportunity away from CEOC and gave 

it to CIE, which was majority owned by the Sponsors and CEC. 

340. CEC breached its fiduciary duties to CEOC. 

341. The CEC Conflicted Directors and other CEC individual directors, who 

individually owed fiduciary duties to CEOC, breached those fiduciary duties. 

Breaches Of Fiduciary Duty By CEOC’s Directors 

342. At the time of the transfer of CEOC’s online gaming assets and business, CEOC’s 

only directors were Gary Loveman and Jonathan Halkyard. Loveman was CEC’s Chairman and 

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Chief Executive Officer, and Halkyard was its Chief Financial Officer. Neither Loveman nor 

Halkyard was independent of CEC in making decisions affecting CEOC. 

343. Loveman breached his fiduciary duties to CEOC by approving, authorizing, and 

facilitating a transaction that was not in the best interests of CEOC. 

344. Loveman also breached his fiduciary duties to CEOC by failing to ensure that 

CEOC received a fair price for these assets or that a fair process was followed. Loveman made 

no effort to convene or create a special committee of independent directors to review the 

transaction; did not consider using a marketing process for the sale of these assets; made no 

effort to solicit any third-party bids, offers, or proposals; did not retain independent lawyers or 

advisors to represent CEOC; made no analysis of CEOC’s solvency; gave no consideration to 

whether CEOC should have received any value for the potential upside of its online gaming 

business; did not consider whether CEOC should have had a means by which to share in CIE’s 

upside or even attempt to determine if the TopCo preferred stock CEOC received really was 

worth $15 million. Instead, Loveman approved the transaction by signing a routine written 

consent. 

Aiding & Abetting Breaches Of Fiduciary Duty 

345. The CEC Conflicted Directors and individual directors, the Sponsors, and the 

Sponsors’ officers knew that CEC, as CEOC’s controlling stockholder, and the boards of CEC 

and CEOC owed fiduciary duties to CEOC. The CEC Conflicted Directors and individual 

directors, the Sponsors, and the Sponsors’ officers and agents knew or should have known that 

CEC and the boards of CEC and CEOC breached those fiduciary duties by compelling CEOC to 

enter into transactions that were against CEOC’s interests, benefited CEC at CEOC’s expense, 

did not provide a fair price to CEOC, and did not result from a fair process. 

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346. The CEC Conflicted Directors and individual directors, the Sponsors, and the 

Sponsors’ officers and agents knowingly participated in those breaches of fiduciary duty in the 

following ways: 

a. by virtue of their power to appoint the entire board of CEC and the fact 

that a majority of the directors of CEC’s board were officers of Apollo and 

TPG, the Sponsors dominated and controlled the actions of CEC’s board 

and CEOC’s board; 

b. the Sponsors conceived, designed, and structured the transaction, 

including the selection of CEOC online assets to be sold and the creation 

of new entities that would hold the assets for the benefit of CEC and the 

Sponsors; 

c. the CEC Conflicted Directors, the Sponsors, and the Sponsors’ officers 

and agents negotiated and implemented the transaction, even though it was 

not in CEOC’s best interests; 

d. CEC and the Sponsors retained Duff & Phelps to value the assets, 

encouraged Duff & Phelps to accept incomplete and misleading 

information, and knew that Duff & Phelps’ opinion on the transaction was 

deeply flawed and contradicted projections that Caesars had prepared and 

used in the ordinary course of its business; 

e. although the Sponsors designed the transaction to transfer ownership and 

control of CEOC’s online business and its valuable WSOP assets to the 

Sponsors and CEC, place those assets beyond the reach of CEOC’s 

creditors, and better position CEC and the Sponsors for CEOC’s 

restructuring or bankruptcy, they did not disclose their intentions to 

CEOC’s board; 

f. despite their knowledge that CEC and CEOC had divergent interests, the 

Sponsors exploited the CEOC board members’ conflicts of interest; and 

g. the Sponsors determined the consideration to be paid to CEOC for its 

online gaming business, which did not provide reasonably equivalent 

value for the transferred assets. 

347. The CEC Conflicted Directors and individual directors and the Sponsors are liable 

for aiding and abetting breaches of fiduciary duty in connection with the transfer of CEOC’s 

online gaming assets and business. 

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348. CEOC has been injured by these breaches of fiduciary duties in an amount to be 

determined. 

CLAIM II 

CEOC INTERCOMPANY LOAN TO CEC 

(Nev. Rev. Stat. §§ 112.180, 112.190, 112.210; 6 Del. C. §§ 1304, 1305, 1307; and 

11 U.S.C. §§ 544, 550) 

(Fraudulent Transfer, Unjust Enrichment)

CEC 

349. Plaintiffs repeat and reallege paragraphs 1 through 348. 

350. In 2009, CEOC borrowed $235 million at market rates and loaned that amount to 

CEC. CEC did not pay interest on this loan. 

351. During the term of its loan to CEC, CEOC paid $5.8 million in interest on the 

$235 million it had borrowed. 

352. CEOC received nothing of value in return for making this loan to CEC. 

353. In June 2010, CEC repaid the principal amount of the loan, but did not pay CEOC 

interest upon the loan. 

354. CEOC was insolvent at the time it made this loan to CEC. 

355. CEC’s failure to pay interest upon the loan is avoidable as a constructive 

fraudulent transfer because CEOC did not receive reasonably equivalent value for the money it 

loaned to CEC. 

356. CEC has been unjustly enriched at CEOC’s expense because of its interest-free 

loan. 

357. CEC should be ordered to pay CEOC for the value of the property that was 

fraudulently transferred, in an amount no less than $5.8 million, plus interest from June 2010 to 

the present. 

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CLAIM III 

2010 CMBS LOAN AGREEMENT AMENDMENT AND 

TRADEMARKS TRANSFER 

(Nev. Rev. Stat. §§ 112.180, 112.190, 112.210; 6 Del. C. §§ 1304, 1305, 1307; and 

11 U.S.C. §§ 544, 550) 

(Fraudulent Transfer, Breach Of Fiduciary Duty, 

Aiding & Abetting Breach Of Fiduciary Duty)

CEC, CMBS PropCos, Sponsors, Sambur, Loveman, Benjamin, Bonderman, Davis, Peterson, 

Press, Rowan, Swann and Williams 

358. Plaintiffs repeat and reallege paragraphs 1 through 357. 

Fraudulent Transfer 

359. At all relevant times, CEOC has been insolvent. 

360. Throughout the relevant period, CEC, the directors of CEC, and the Sponsors 

completely dominated and controlled CEOC and all of CEOC’s subsidiaries and affiliates. 

361. At the time of the 2008 LBO, CEOC transferred the six CMBS Properties to the 

CMBS PropCos. In addition to their physical assets, the CMBS Properties used intellectual 

property assets, such as their trademarks and trade dress associated with the properties’ casinos, 

restaurants, shops, and other activities (the “CMBS IP”). The CMBS IP was owned by Caesars 

License Company, LLC (“CLC”). 

362. CEOC and CLC were alter-egos. CEOC owned all of the equity of CLC and used 

CLC solely as an entity to hold title to certain intellectual property assets. 

363. At the direction of CEC, on August 31, 2010, CLC assigned all of its right, title 

and interest in the CMBS IP to the CMBS PropCos. CLC received $100 per property for that 

assignment, but immediately paid each CMBS PropCo $100 for a limited license back of that 

same property. In the end, CLC received little or no overall consideration for this assignment of 

its intellectual property rights for the term of the loans made to the CMBS PropCos. 

364. These intellectual property rights were extremely valuable. 

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365. The transfer of these intellectual property rights was a constructive fraudulent 

transfer because CEOC received inadequate consideration and less than reasonably equivalent 

value for them. 

366. The transfer of the CMBS intellectual property rights is avoidable and 

recoverable, and the CMBS PropCos are liable for the constructive fraudulent transfer of the 

CMBS intellectual property rights. 

Breach Of Fiduciary Duty 

367. At the time of the transfers of CEOC’s CMBS IP, the CMBS PropCos were direct 

or indirect subsidiaries or affiliates of CEC. Thus, the transfer of CEOC’s CMBS IP to the 

CMBS PropCos was a self-dealing transaction. 

368. The price paid to CEOC for transferring the assets was far below the value of 

those assets and was not entirely fair to CEOC. 

369. The process by which CEC initiated, structured, negotiated, and disclosed the 

transaction was not entirely fair to CEOC. CEOC was given no say in deciding whether to sell 

these assets, or how the transaction was structured. CEOC had no role in the negotiations of the 

transaction, and was not even represented in the negotiations. Instead, the entire process was 

dominated by CEC and the Sponsors. Moreover, CEC used its dominance and control over 

CEOC to ensure that CEOC lacked independent directors, financial advisors, and legal counsel 

necessary to fairly evaluate the transaction, and proposed the transaction to CEOC knowing that 

CEOC lacked the independent governance or resources to fairly evaluate the transaction. 

370. CEC breached its fiduciary duties to CEOC. 

371. CEC’s directors, who individually owed fiduciary duties to CEOC, breached 

those fiduciary duties. 

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Breaches Of Fiduciary Duty By CEOC’s Directors 

372. At the time of the transfer of the CMBS IP, CEOC’s only directors were Gary 

Loveman and Jonathan Halkyard. Loveman was the Chairman and Chief Executive Officer of 

CEC, and Halkyard was CEC’s Chief Financial Officer. As a result, neither Loveman nor 

Halkyard was independent of CEC in making decisions affecting CEOC. 

373. Loveman breached his fiduciary duties to CEOC by approving, authorizing, and 

facilitating a transaction that was not in the best interests of CEOC. 

374. Loveman also breached his fiduciary duties to CEOC by failing to ensure that 

CEOC received a fair price for these assets or that a fair process was followed. Loveman made 

no effort to convene or create a special committee of independent directors to review the 

transaction; did not ask for or receive an opinion about the fairness of the transaction to CEOC; 

did not consider using a marketing process for the sale of these assets; made no effort to solicit 

any third-party bids, offers, or proposals; did not retain independent lawyers or advisors to 

represent CEOC; and made no analysis of CEOC’s solvency. In fact, CEOC and CLC were so 

far removed from the process that there is no evidence Loveman (or Halkyard) even executed 

approvals, consents, or authorizations for the transfers. 

Aiding & Abetting Breaches Of Fiduciary Duty 

375. The Sponsors and the Sponsors’ officers and agents knew that CEC, as CEOC’s 

controlling stockholder, and the boards of CEC and CEOC owed fiduciary duties to CEOC. The 

CEC Conflicted Directors and individual directors, the Sponsors, and the Sponsors’ officers and 

agents knew or should have known that CEC and the boards of CEC and CEOC breached those 

fiduciary duties by compelling CEOC to enter into transactions that were against CEOC’s 

interests, benefited CEC at CEOC’s expense, did not provide a fair price to CEOC, and did not 

result from a fair process. 

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376. The Sponsors and the Sponsors’ officers and agents knowingly participated in 

those breaches of fiduciary duty in the following ways: 

a. by virtue of their power to appoint the entire board of CEC and the fact 

that a majority of the directors of CEC’s board were officers of Apollo and 

TPG, the Sponsors dominated and controlled the actions of CEC’s board 

and CEOC’s board; 

b. the Sponsors, and Apollo in particular, led the efforts to conceive of, 

design, and structure the transfer of the CMBS IP; 

c. the CEC Conflicted Directors, the Sponsors, and the Sponsors’ officers 

and agents directly negotiated and implemented the transaction, even 

though it was not in CEOC’s best interests; 

d. although the Sponsors understood that the transaction was designed to 

allow CEC and the Sponsors to take the valuable CMBS IP for nominal 

consideration, transfer the CMBS IP beyond the reach of CEOC’s 

creditors, and otherwise better position CEC and the Sponsors for CEOC’s 

restructuring or bankruptcy, they did not disclose these intentions to 

CEOC’s board; 

e. despite their knowledge that CEC and CEOC had divergent interests, the 

Sponsors exploited the conflicts of interest of CEOC board members who 

sat on CEC’s board or were officers of CEC; 

f. Apollo, through Sambur, led the negotiations with the CMBS lenders; 

g. the Sponsors negotiated financial terms which did not provide CEOC 

reasonably equivalent value for the transferred assets; 

h. despite their knowledge that CEC and CEOC had divergent interests, the 

Sponsors exploited the CEOC board members’ conflicts of interest; and 

i. the Sponsors used their control of CEOC to structure the transaction in a 

manner that benefitted the Sponsors without presenting it to the CEOC 

board for its review or approval. 

377. The Sponsors, CEC individual directors and Sambur are liable for aiding and 

abetting breaches of fiduciary duty in connection with the transfer of the CMBS intellectual 

property rights. 

378. CEOC has been injured by these breaches of fiduciary duties in an amount to be 

determined. 

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CLAIM IV 

TAX REFUND 

(Nev. Rev. Stat. §§ 112.180, 112.190, 112.210; 6 Del. C. §§ 1304, 1305, 1307; and 

11 U.S.C. §§ 542, 544, 548(a)(1)(A),(B), 550) 

(Fraudulent Transfer, Turnover, Unjust Enrichment)

CEC 

379. Plaintiffs repeat and reallege paragraphs 1 through 378. 

380. For the taxable years 2005 through 2008, CEOC was a member of the CEC 

consolidated group for tax purposes (“CEC Group”). In 2009, the CEC Group reported a net 

operating loss (“NOL”) and carried it back to the 2006 and 2008 tax years by filing a tentative 

refund claim. 

381. In March 2011, CEOC was credited $220.8 million, which was the cash amount 

of the 2009 Refund provided to the CEC Group. CEOC, however, was owed $55.8 million 

above and beyond that cash payment. CEC did not credit or otherwise pay CEOC this amount 

and has failed to provide any justification for failing to do so. 

382. In addition to the 2009 Refund, CEC did not fairly compensate CEOC for CEC’s 

use of the Net Operating Losses (“NOLs”) that were generated by CEOC and those of its 

subsidiaries that later filed for bankruptcy. Non-debtors, including CEC, used approximately 

$4.02 billion of the NOLs without any compensation to CEOC or recognition that – had these 

NOLs not been used by the non-Debtors – they would have been available to the Debtors to be 

applied against future taxable income. 

383. CEOC received no value from CEC or anyone else for the use of these NOLs. 

384. CEOC received inadequate consideration and less than reasonably equivalent 

value for this asset. 

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385. As a result, CEC’s use of CEOC’s NOLs is a fraudulent transfer that is avoidable 

and recoverable. 

386. The economic benefit of the NOLs is an asset of CEOC that CEC and affiliates of 

CEC should turn over to CEOC. 

387. CEC has been unjustly enriched to the detriment of CEOC by CEC’s use of the 

NOLs. Equity and fairness require that CEC make immediate restitution for the value of the lost 

economic benefit from the utilization of the NOLs by the non-Debtors. 

388. In addition, CEC breached its fiduciary duties to CEOC by failing to properly 

compensate CEOC for CEC’s use of the NOLs and instead taking the benefit of the NOLs for 

itself. 

CLAIM V 

2011 WSOP TRANSACTION 

(Nev. Rev. Stat. §§ 112.180, 112.190, 112.210; 6 Del. C. §§ 1304, 1305, 1307; and 

11 U.S.C. §§ 544, 550) 

(Fraudulent Transfer, Breach Of Fiduciary Duty, Aiding & 

Abetting Breach Of Fiduciary Duty)

WSOP Transaction Transferees, Sponsors, CEC, 

CEC Conflicted Directors, Loveman, Benjamin, Peterson, Press, Swann, and Williams 

389. Plaintiffs repeat and reallege paragraphs 1 through 388. 

Fraudulent Transfer 

390. At all relevant times, CEOC has been insolvent. 

391. Throughout the relevant period, CEC, the directors of CEC, and the Sponsors 

completely dominated and controlled CEOC and all of CEOC’s subsidiaries and affiliates. 

392. Among CEOC’s profitable operations was its business of hosting live, in-person 

tournaments as part of its World Series of Poker franchise. The World Series of Poker was, and 

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remains, the premier poker tournament in the world. CEOC’s rights to host and profit from the 

World Series of Poker (the “WSOP Tournament Rights”) were immensely valuable. 

393. In 2010, CEC began negotiations with CIE to transfer of CEOC’s WSOP 

Tournament Rights from CEOC to CIE. Since CEC owned all of the voting stock of CEOC and 

most of the equity of CIE, these negotiations essentially were negotiations CEC had with itself. 

394. On September 1, 2011, CEC closed a multi-step transaction CIE (the “2011 

WSOP Transaction”) pursuant to which CEOC transferred its WSOP Tournament Rights to CIE. 

The transfer of CEOC’s WSOP Tournament Rights was a constructive fraudulent transfer 

because CEOC received inadequate consideration and less than reasonably equivalent value for 

the asset. 

395. In addition, the transfer of CEOC’s WSOP Tournament Rights was an actual 

fraudulent transfer because the purpose and effect of the transfer was to hinder or delay CEOC’s 

creditors by placing critical and valuable assets beyond their reach. Evidence of fraudulent 

intent includes the facts that: 

a. the Sponsors, and Apollo in particular, conceived of the transaction and 

identified the assets to be transferred; 

b. the transaction was designed and intended to allow CEC and the Sponsors 

to take control of CEOC’s WSOP Tournament Rights, transfer those 

Rights beyond the reach of CEOC’s creditors, and otherwise better 

position CEC and the Sponsors for CEOC’s restructuring or bankruptcy; 

c. CEOC, CEC, the Sponsors, and the individual defendants understood that 

CEOC was insolvent on and after the date of the transfer; 

d. despite their knowledge that CEC and CEOC had divergent interests, 

CEC, the Sponsors and the WSOP Transaction Transferees proposed, 

negotiated, structured, evaluated, and approved the transfers through a 

process that failed to involve CEOC or protect its interests; 

e. CEC and the Sponsors retained control and ownership of the assets; 

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f. the Sponsors, negotiating on behalf of CEC and CIE, actively attempted to 

reduce the consideration to be received by CEOC, which was initially set 

at $55 million, to $20.5 million; 

g. the value of the consideration received by CEOC was not reasonably 

equivalent to the value of the WSOP Tournament Rights; 

h. the Sponsors and CEC proceeded with the transaction with full knowledge 

that CEOC had not received a fairness opinion and that the fairness 

opinion prepared by Valuation Research Corporation for the CEC board 

was flawed in numerous ways; 

i. the Sponsors and CEC proceeded with the transaction with full knowledge 

that the Tournament Rights were not offered to any true third-party buyers 

or subject to any marketing process; 

j. the transfer substantially impaired CEOC’s future ability to service its 

debt; and 

k. this transfer was never presented to the CEOC board for review or 

approval and was instead approved by CEC’s board alone. 

396. The transfer of the WSOP Tournament Rights is avoidable and recoverable, and 

the WSOP Transaction Transferees are liable for the constructive and actual fraudulent transfer 

of the WSOP Tournament Rights. 

Breaches Of Fiduciary Duty By CEC And CEC’s Directors 

397. At the time of the 2011 WSOP Transaction, the WSOP Transaction Transferees 

were direct or indirect subsidiaries or affiliates of CEC. Thus, the transfer of CEOC’s WSOP 

Tournament Rights to the WSOP Transaction Transferees was a self-dealing transaction. 

398. The price paid to CEOC for transferring the assets was far below the value of 

those assets and was not entirely fair to CEOC. 

399. The process by which CEC initiated, structured, negotiated, and disclosed the 

transaction was not entirely fair to CEOC. CEOC was given no say in deciding whether to sell 

these assets, how the transaction was structured, or when and how it was disclosed. CEOC had 

no role in the negotiations of the transaction and was not even represented in the negotiations. 

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Instead, the entire process was dominated by CEC and the Sponsors. Moreover, CEC used its 

dominance and control over CEOC to ensure that CEOC lacked independent directors, financial 

advisors, and legal counsel necessary to fairly evaluate the transaction and proposed the 

transaction to CEOC knowing that CEOC lacked the independent governance or resources to 

fairly evaluate the transaction. 

400. CEC breached its fiduciary duties to CEOC. 

401. The CEC Conflicted Directors and individual directors, who individually owed 

fiduciary duties to CEOC, breached those fiduciary duties. 

Breaches Of Fiduciary Duty By CEOC’s Directors 

402. At the time of the transfer of WSOP Tournament Rights, CEOC’s only directors 

were Gary Loveman and Jonathan Halkyard. Loveman was the Chairman and Chief Executive 

Officer of CEC and Halkyard was CEC’s Chief Financial Officer. As a result, neither Loveman 

nor Halkyard was independent of CEC in making decisions affecting CEOC. 

403. Loveman breached his fiduciary duties to CEOC by approving, authorizing, and 

facilitating a transaction that was not in the best interests of CEOC. 

404. Loveman also breached his fiduciary duties to CEOC by failing to ensure that 

CEOC received a fair price for these assets or that a fair process was followed. Loveman did not 

consider using a marketing process for the sale of these assets; made no effort to solicit any 

third-party bids, offers, or proposals; made no effort to convene or create a special committee of 

independent directors to review the transaction; did not ask for or receive an opinion about the 

fairness of the transaction to CEOC; did not retain independent lawyers or advisors to represent 

CEOC; and made no analysis of CEOC’s solvency. Upon information and belief, Loveman (and 

Halkyard) did not even review, consider, or approve this transaction, but instead allowed it to 

occur without any effort to review its substance or merits. Halkyard signed the numerous 

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transaction agreements on behalf of all non-CIE entities to the transactions, including CEOC, 

CEC, and CT. 

Aiding & Abetting Breaches Of Fiduciary Duty 

405. The CEC Conflicted Directors and individual directors, the Sponsors, and the 

Sponsors’ officers and agents knew that CEC, as CEOC’s controlling stockholder, and the 

boards of CEC and CEOC owed fiduciary duties to CEOC. The CEC Conflicted Directors and 

individual directors, the Sponsors, and the Sponsors’ officers and agents knew that CEC and the 

boards of CEC and CEOC breached those fiduciary duties by compelling CEOC to enter into 

transactions that were against CEOC’s interests, benefited CEC at CEOC’s expense, did not 

provide a fair price to CEOC, and did not result from a fair process. 

406. The CEC Conflicted Directors and individual directors, the Sponsors, and the 

Sponsors’ officers and agents knowingly participated in those breaches of fiduciary duty in the 

following ways: 

a. by virtue of their power to appoint the entire board of CEC and the fact 

that a majority of the directors of CEC’s board were officers of Apollo and 

TPG, the Sponsors dominated and controlled the actions of CEC’s board 

and CEOC’s board; 

b. the plan to transfer CEOC’s WSOP Tournament Rights to CIE was 

conceived, designed, and structured by Apollo; 

c. the CEC Conflicted Directors, the Sponsors, and the Sponsors’ officers 

and agents negotiated and implemented the transfer of CEOC’s WSOP 

Tournament Rights, even though it was not in CEOC’s best interests; 

d. although the Sponsors understood that the transaction was designed to 

allow CEC and the Sponsors to take control of CEOC’s WSOP 

Tournament Rights, transfer those assets beyond the reach of CEOC’s 

creditors, and better position CEC and the Sponsors for CEOC’s 

restructuring or bankruptcy, they did not disclose these intentions to 

CEOC’s board; 

e. despite their knowledge that CEC and CEOC had divergent interests, the 

CEC Conflicted Directors and individual directors, the Sponsors, and the 

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Sponsors’ officers and agents exploited the CEOC board members’ 

conflicts of interest who sat on CEC’s board or were officers of CEC; 

f. the CEC Conflicted Directors and individual directors, the Sponsors and 

the Sponsors’ officers and agents allowed Paul Weiss to represent all 

entities in the deal, thus depriving CEOC of independent legal counsel and 

facilitating the Sponsors and CEC’s scheme to deprive CEOC of fair price 

and fair process; 

g. the Sponsors knew that CEC negotiated the financial terms of the 

transaction, which did not provide CEOC reasonably equivalent value for 

the transferred assets; and 

h. the Sponsors used their control of CEOC to structure the transaction in a 

manner that benefitted the Sponsors without presenting it to the CEOC 

board for its review or approval. 

407. The CEC Conflicted Directors and individual directors, the Sponsors, and the 

Sponsors’ officers and agents are liable for aiding and abetting breaches of fiduciary duty in 

connection with the transfer of the WSOP Tournament Rights. 

408. CEOC has been injured by these breaches of fiduciary duties in an amount to be 

determined. 

CLAIM VI 

LINQ AND OCTAVIUS TRANSFERS 

(Nev. Rev. Stat. §§ 112.180, 112.190, 112.210; 6 Del. C. §§ 1304, 1305, 1307; and 

11 U.S.C. §§ 544, 548(a)(1)(A),(B), 550) 

(Fraudulent Transfer, Breach Of Fiduciary Duty, Aiding & Abetting 

Breach Of Fiduciary Duty, Civil Conspiracy)

Linq/Octavius Transferees, CEC, Sponsors, CEC Conflicted Directors, 

Loveman, Sambur, Rowan, Benjamin, Housenbold, Kleisner, Press, Swann, and Williams 

409. Plaintiffs repeat and reallege paragraphs 1 through 408. 

Fraudulent Transfer 

410. At all relevant times, CEOC has been insolvent. 

411. Throughout the relevant period, CEC, the directors of CEC, and the Sponsors 

completely dominated and controlled CEOC and all of CEOC’s subsidiaries and affiliates. 

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412. CEC and the Sponsors owned, controlled, and dominated the Linq/Octavius 

Transferees. 

413. In connection with the refinancing of the CMBS Debt in late 2013, CEOC 

subsidiaries transferred Project Linq and the Octavius Tower to the Linq/Octavius Transferees. 

The transfer of Project Linq and the Octavius Tower was a constructive fraudulent transfer 

because CEOC received inadequate consideration and less than reasonably equivalent value for 

them. 

414. In addition, the transfer of Linq and Octavius was an actual fraudulent transfer 

because the purpose and effect of the transfers was to hinder or delay CEOC’s creditors by 

placing critical and valuable assets beyond their reach. Evidence of fraudulent intent includes 

the facts that: 

a. the Sponsors, and Apollo in particular, conceived the transaction and 

identified the properties to be transferred; 

b. the transaction did not serve any interest of CEOC’s, but instead filled an 

“equity gap” that hindered the refinancing of debt issued by a different 

Caesars’ subsidiary; 

c. in addition to filling the “equity gap,” the transaction was designed and 

intended to allow CEC and the Sponsors to take control of CEOC assets 

with significant growth potential, transfer those assets beyond the reach of 

CEOC’s creditors, and better position CEC and the Sponsors for CEOC’s 

restructuring or bankruptcy; 

d. CEOC, CEC, the Sponsors, the 2013 Transferees, and the individual 

defendants understood that CEOC was insolvent on and after the date of 

each transfer evidenced by, inter alia, analyses indicating that CEOC had 

a negative equity value and would be unable to repay its debts, and the 

decision to create bankruptcy remote entities to receive and hold valuable 

CEOC assets; 

e. despite their knowledge that CEC and CEOC had divergent interests, 

CEOC, CEC, the Sponsors, the 2013 Transferees, and the individual 

defendants proposed, negotiated, structured, evaluated, and approved the 

transfers through a process that failed to involve or protect the interests of 

CEOC; 

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f. the transferred properties were never offered to any true third-party buyer 

or subject to any marketing process; 

g. the transfers were to newly created affiliates of CEC, owned and 

controlled by CEC and the Sponsors; 

h. CEC and the Sponsors retained control and ownership of the assets; 

i. the value of the consideration received by CEOC was not reasonably 

equivalent to the value of the assets transferred; 

j. the transfer substantially impaired CEOC’s future ability to service its 

debt; 

k. the transfer of Octavius reduced the value of Caesars’ Palace by giving 

CERP (and, thus CEC) significant leverage in renegotiating lease terms 

and the ability to influence the terms of any future disposition of, or 

improvements to, Caesars’ Palace; 

l. Apollo, who along with TPG and CEC stood on both sides of the 

transaction, made repeated efforts to reduce the consideration to be paid 

CEOC; 

m. Apollo made internally inconsistent and manipulative revisions to its own 

valuations in order to eliminate or reduce the consideration paid to CEOC; 

n. Apollo selected Perella Weinberg Partners to provide a fairness opinion 

because Perella had a long-term relationship with Paul Weiss; 

o. Apollo knowingly advanced specious arguments to eliminate or reduce the 

consideration to be paid by CEOC for the assets; 

p. Perella insisted on additional consideration for CEOC in the form of cash 

or cash equivalents but indicated that it had “flexibility” on the amount; 

q. Apollo directed Perella to make incorrect untrue assumptions, including 

assumptions relating to the impact of a failure to successfully refinance the 

CMBS Debt on CEOC’s share of corporate expenses, the fair market value 

of existing lease payments made to Linq and Octavius, and the future 

earnings of the High Roller observation wheel; 

r. Apollo requested that Perella not include language in its fairness opinion 

that sought to assume that the avoidance of costs was a legally cognizable 

form of consideration; and 

s. the final consideration provided to CEOC, $69.5 million of CEOC debt 

and $80.722 million in cash, was much less than the $250 million Perella 

initially suggested was appropriate. 

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415. The transfer of Linq and Octavius is avoidable and recoverable, and the 

Linq/Octavius Transferees are liable for the constructive and actual fraudulent transfer of Linq 

and Octavius. 

Breaches Of Fiduciary Duty By CEC And CEC’s Directors 

416. At the time of the transfers of Linq and Octavius, the Linq/Octavius Transferees 

were direct or indirect subsidiaries of CEC. Thus, the transfers of Linq and Octavius to the 

Linq/Octavius Transferees were self-dealing transactions. 

417. The price paid to CEOC for transferring Linq and Octavius was far below the 

value of those assets and was not entirely fair to CEOC. 

418. The process by which CEC initiated, structured, negotiated, and disclosed the 

transaction was not entirely fair to CEOC. CEOC was given no say in deciding whether to sell 

these assets, how the transaction was structured, or when and how it was disclosed. CEOC had 

no role in the negotiations of the transaction, and was not even represented in the negotiations. 

Instead, the entire process was dominated by CEC and the Sponsors. Moreover, CEC used its 

dominance and control over CEOC to ensure that CEOC lacked independent directors, financial 

advisors, and legal counsel necessary to fairly evaluate the transaction and proposed the 

transaction to CEOC knowing that CEOC lacked the independent governance or resources to 

fairly evaluate the transaction. 

419. CEC breached its fiduciary duties to CEOC. 

420. The CEC Conflicted Directors and individual directors, who individually owed 

fiduciary duties to CEOC, breached those fiduciary duties. 

Breaches Of Fiduciary Duty By CEOC’s Directors 

421. At the time of the transfer of Linq and Octavius, CEOC’s only directors were 

Gary Loveman and Michael Cohen. Loveman was the Chairman and Chief Executive Officer of 

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CEC, and Cohen was a senior vice president, deputy general counsel, and corporate secretary of 

CEC. As a result, neither Loveman nor Cohen was independent of CEC in making decisions 

affecting CEOC. 

422. Loveman breached his fiduciary duties to CEOC by approving, authorizing, and 

facilitating a transaction that was not in the best interests of CEOC. 

423. Loveman also breached his fiduciary duties to CEOC by failing to ensure that 

CEOC received a fair price for these assets or that a fair process was followed. Loveman did not 

consider using a marketing process for the sale of these assets; made no effort to solicit any 

third-party bids, offers, or proposals; made no effort to convene or create a special committee of 

independent directors to review the transaction; did not retain independent lawyers or advisors to 

represent CEOC; made no analysis of CEOC’s solvency; and conducted no meaningful review of 

the fairness of the transaction to CEOC. Instead, Loveman approved the transaction upon 

inadequate information in a short telephonic board meeting. 

Aiding & Abetting Breaches Of Fiduciary Duty 

424. The CEC Conflicted Directors and individual directors, the Sponsors, and the 

Sponsors’ officers and agents knew that CEC, as CEOC’s controlling stockholder, and the 

boards of CEC and CEOC owed fiduciary duties to CEOC. The CEC Conflicted Directors and 

individual directors, the Sponsors, and the Sponsors’ officers and agents knew or should have 

known that CEC and the boards of CEC and CEOC breached those fiduciary duties by 

compelling CEOC to enter into transactions that were against CEOC’s interests, benefited CEC 

at CEOC’s expense, did not provide a fair price to CEOC, and did not result from a fair process. 

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425. The CEC Conflicted Directors and individual directors, the Sponsors, and the 

Sponsors’ officers and agents knowingly participated in those breaches of fiduciary duties in the 

following ways: 

a. by virtue of their power to appoint the entire board of CEC and the fact 

that a majority of the directors of CEC’s board were officers of Apollo and 

TPG, the Sponsors dominated and controlled the actions of CEC’s board 

and CEOC’s board; 

b. the Sponsors and members of CEC’s management conceived of the plan to 

transfer Linq and Octavius to CERP and designed, and structured the 

transaction to benefit CEC and the Sponsors; 

c. the CEC Conflicted Directors and individual directors, the Sponsors, and 

the Sponsors’ officers and agents negotiated and implemented the 

transaction, even though it was not in CEOC’s best interests; 

d. although the Sponsors understood that the transfer of Linq and Octavius 

was designed to allow CEC and the Sponsors to maintain control of CEOC 

assets with significant growth potential, place those assets beyond the 

reach of CEOC’s creditors, and better position CEC and the Sponsors for 

CEOC’s restructuring or bankruptcy, they did not disclose these intentions 

to CEOC’s board; 

e. despite their knowledge that CEC and CEOC had divergent interests, the 

Sponsors exploited the conflicts of interest of CEOC board members who 

sat on CEC’s board or were officers of CEC; 

f. the CEC Conflicted Directors and individual directors, the Sponsors and 

the Sponsors’ officers and agents allowed Paul Weiss to represent all 

entities in the deal, thus depriving CEOC of independent legal counsel and 

facilitating the Sponsors and CEC’s scheme to deprive CEOC of fair price 

and fair process; 

g. Apollo formally engaged Perella only after the opinion was completed and 

after Perella agreed to accept certain assumptions requested by Apollo; 

h. Apollo made repeated efforts to reduce the consideration to be paid 

CEOC; 

i. Apollo made internally inconsistent and manipulative revisions to its own 

valuations in order to reduce the consideration paid to CEOC; 

j. Apollo advanced specious arguments to eliminate or reduce the 

consideration to be paid by CEOC for the assets; 

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k. Apollo directed Perella to make several incorrect and untrue assumptions, 

including assumptions relating to the impact of a failure to successfully 

refinance the CMBS Debt on CEOC’s share of corporate expenses, the fair 

market value of existing lease payments made to Linq and Octavius, and 

the future earnings of the High Roller observation wheel; and 

l. Apollo requested that Perella not include language in its fairness opinion 

that sought to assume that the avoidance of costs was a legally cognizable 

form of consideration. 

426. The CEC Conflicted Directors and individual directors and the Sponsors are liable 

for aiding and abetting breaches of fiduciary duty in connection with the Linq and Octavius 

transfer. 

427. CEOC has been injured by these breaches of fiduciary duties in an amount to be 

determined. 

Civil Conspiracy 

428. Starting in mid-2012, the Conflicted Directors agreed and conspired to commit 

unlawful acts, including to fraudulently transfer CEOC’s valuable assets, breach fiduciary duties 

owed to CEOC, engage CEOC in damaging financial transactions, and otherwise delay, hinder, 

and defraud CEOC and its creditors. Each of the conspirators intentionally participated in this 

scheme. The transfer of Linq and Octavius was an overt act taken in furtherance of the 

conspirators’ unlawful scheme. The conspirators’ actions in creating, structuring, negotiating, 

evaluating, and approving the transfer, as more fully detailed herein, constitute further overt acts 

taken in furtherance of their unlawful scheme. 

429. The Linq and Octavius Transfers, the conspirators’ overt acts in furtherance of 

that transfer, and the conspirators’ overall scheme and agreement to fraudulently transfer 

CEOC’s valuable assets, breach fiduciary duties owed to CEOC, engage CEOC in damaging 

financial transactions, and otherwise delay, hinder, and defraud CEOC and its creditors caused 

damages to CEOC in an amount to be determined. 

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CLAIM VII 

TRANSFER OF PLANET HOLLYWOOD AND HORSESHOE BALTIMORE 

(Nev. Rev. Stat. §§ 112.180, 112.190, 112.210; 6 Del. C. §§ 1304, 1305, 1307; and 

11 U.S.C. §§ 544, 548(a)(1)(A),(B), 550) 

(Fraudulent Transfer, Breach Of Fiduciary Duty, Aiding & Abetting 

Breach Of Fiduciary Duty, Civil Conspiracy)

2013 Transferees, CEC, Sponsors, CEC Conflicted Directors, 

Loveman, Rowan, Sambur, Benjamin, Housenbold, Kleisner, Press, Swann and Williams 

430. Plaintiffs repeat and reallege paragraphs 1 through 429. 

Fraudulent Transfer 

431. At all relevant times, CEOC has been insolvent. 

432. Throughout the relevant period, CEC, the directors of CEC, and the Sponsors 

completely dominated and controlled CEOC and all of CEOC’s subsidiaries and affiliates. 

433. At all relevant times, CEC and the Sponsors owned, controlled, and dominated 

the 2013 Transferees. 

434. On October 21, 2013, CEC, CEOC, and the 2013 Transferees entered into the 

2013 Transaction Agreement, pursuant to which CEOC subsidiaries transferred the 

Planet Hollywood Resort and Casino in Las Vegas and CEOC’s interest in the Horseshoe 

Baltimore Casino, as well as 50% of the stream of management fees CEOC would earn from 

managing those properties to the 2013 Transferees (collectively, the “2013 Transfers”). In 

addition, the 2013 Transaction Agreement required CEOC to enter into a Management Services 

Agreement with CEOC, Growth Partners, and CAC that redefined the economic relationship 

between CEOC and CEC. 

435. The consideration to CEOC for these transfers was a cash payment of 

$210 million for Planet Hollywood, $70 million for the Planet Hollywood management fees, and 

$80 million for the Baltimore casino and management fees. Additionally, a subsidiary of Growth 

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Partners assumed $513 million of debt secured by Planet Hollywood, although this was offset by 

roughly $40 million in restricted cash on deposit and as much as another $175 million in 

unrestricted cash held by the holding company that owned Planet Hollywood. 

436. The 2013 Transfers were constructive fraudulent transfers because CEOC 

received inadequate consideration and less than reasonably equivalent value for the assets 

transferred. 

437. In addition, the 2013 Transfers were actual fraudulent transfers because the 

purpose and effect of the transfers was to hinder or delay CEOC’s creditors by placing critical 

and valuable assets beyond their reach. Evidence of fraudulent intent includes the facts that: 

a. the Sponsors, and Apollo in particular, conceived the transaction and 

identified the properties to be transferred; 

b. the transaction was designed and intended to allow CEC and the Sponsors 

to take control of CEOC assets with significant growth potential, transfer 

those assets beyond the reach of CEOC’s creditors, and better position 

CEC and the Sponsors for CEOC’s restructuring or bankruptcy; 

c. CEOC, CEC, the Sponsors, the 2013 Transferees, and the individual 

defendants understood that CEOC was insolvent on and after the date of 

each transfer; 

d. despite their knowledge that CEC and CEOC had divergent interests 

CEOC, CEC, the Sponsors, and the 2013 Transferees proposed, 

negotiated, structured, evaluated, and approved the transfers through a 

process that failed to involve CEOC or protect the interests of CEOC; 

e. the transferred properties were never offered to any true third-party buyer 

or subject to any marketing process; 

f. the transfers were to newly created affiliates of CEC, owned and 

controlled by CEC and the Sponsors; 

g. CEC and the Sponsors retained control and ownership of the assets; 

h. the Sponsors actively attempted to reduce the consideration to be received 

by CEOC; 

i. the value of the consideration received by CEOC was not reasonably 

equivalent to the value of the assets transferred, as evidenced by analyses 

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performed by the Sponsors immediately after the closing of the 

transaction; 

j. the transfer substantially impaired CEOC’s future ability to service its 

debt; 

k. despite repeated requests for updated EBITDA projections for the 

properties to be transferred, the Sponsors and CEC withheld the latest 

projections from Evercore; 

l. the Sponsors used their power and influence over the management of CEC 

and CEOC to cause them to misrepresent to Evercore and others the 

projected revenue and EBITDA CEOC forecast it would receive as a 

result of its multi-year contract with entertainer Britney Spears; 

m. the Sponsors and CEC misrepresented or failed to correct misleading 

information relied upon by Evercore as to the timing of the sale of a 

portion of CEOC’s ownership interest in the Horseshoe Baltimore casino; 

n. the fee for the fairness opinion rendered by Evercore was largely 

contingent upon consummation of the transaction; and 

o. the putative purpose of the transfer—to provide CEOC with short-term 

liquidity—was inconsistent with efforts, taken during the time the 

transaction was developed, to transfer cash from CEOC to CEC through 

repayments of the intercompany revolver. 

438. The 2013 Transfers are avoidable and recoverable, and the 2013 Transferees are 

liable for the constructive and actual fraudulent transfer of Planet Hollywood and Baltimore 

Horseshoe and others assets included in the 2013 Transfers. 

Breaches Of Fiduciary Duty By CEC And CEC’s Directors 

439. At the time of the 2013 Transfers, the 2013 Transferees were direct or indirect 

subsidiaries or affiliates of CEC. Thus, the 2013 Transfers were self-dealing transactions. 

440. The price paid to CEOC for the 2013 Transfers was far below the value of the 

assets and was not entirely fair to CEOC. 

441. The process by which CEC initiated, structured, negotiated, and disclosed the 

transaction was not entirely fair to CEOC. CEC misrepresented to Evercore Planet Hollywood’s 

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earnings and prospects and the percentage of CEOC’s ownership interest in the Horseshoe 

Baltimore. 

442. CEC dominated and chose the board of directors of CEOC. Although CEC was 

fully aware that transactions between CEC (or affiliates of CEC) and CEOC would be 

self-dealing transactions that would require fair process, CEC failed to appoint to the CEOC 

board any directors who were independent of CEC. CEC thus deprived CEOC of fair process by 

preventing CEOC from having directors who would be able to independently consider the 

fairness of the transaction. Similarly, CEC deprived CEOC of fair process by proceeding with 

the transfers with knowledge that CEOC did not have independent financial advisors or 

independent legal advisors. 

443. CEOC was given no say in deciding whether to sell these assets, how the 

transaction was structured, or when and how it was disclosed. CEOC had no role in the 

negotiations of the transaction, and was not even represented in the negotiations. Instead, the 

entire process was dominated by CEC and the Sponsors. Moreover, CEC used its dominance 

and control over CEOC to ensure that CEOC lacked independent directors, financial advisors, 

and legal counsel necessary to fairly evaluate the transaction and proposed the transaction to 

CEOC knowing that CEOC lacked the independent governance or resources to fairly evaluate 

the transaction. 

444. CEC breached its fiduciary duties to CEOC. 

445. The CEC Conflicted Directors and individual directors, who individually owed 

fiduciary duties to CEOC, breached those fiduciary duties. 

Breaches Of Fiduciary Duty By CEOC’s Directors 

446. At the time of the transfer of Planet Hollywood and CEOC’s interest in the 

Horseshoe Baltimore, CEOC’s only directors were Gary Loveman and Michael Cohen. 

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Loveman was the Chairman and Chief Executive Officer of CEC and Cohen was a senior vice 

president, deputy general counsel, and corporate secretary of CEC. As a result, neither Loveman 

nor Cohen was independent of CEC in making decisions affecting CEOC. 

447. Loveman breached his fiduciary duties to CEOC by approving, authorizing, and 

facilitating a transaction that was not in the best interests of CEOC. 

448. Loveman also breached his fiduciary duties to CEOC by approving the transfer of 

Planet Hollywood and CEOC’s interest in the Horseshoe Baltimore when he had disqualifying 

conflicts of interest and by failing to ensure that CEOC received a fair price for these assets or 

that a fair process was followed. Loveman made no effort to have CEOC represented in the 

negotiations of the transfers; did not consider using a marketing process for the sale of these 

assets; made no effort to solicit any third-party bids, offers or proposals; made no effort to 

convene or create a special committee of independent directors to review the transaction; did not 

ask for or receive an opinion about the fairness of the transaction to CEOC; did not retain 

independent lawyers or advisors to represent CEOC; made no analysis of CEOC’s solvency; and 

conducted no meaningful review of the fairness of the transaction to CEOC. Instead, Loveman 

approved the transaction upon inadequate information by a routine written consent. 

Aiding & Abetting Breaches Of Fiduciary Duty 

449. The CEC Conflicted Directors and individual directors, the Sponsors, and the 

Sponsors’ officers and agents knew that CEC, as CEOC’s controlling stockholder, and the 

boards of CEC and CEOC owed fiduciary duties to CEOC. The CEC Conflicted Directors, the 

Sponsors, and the Sponsors’ officers and agents knew or should have known that CEC and the 

boards of CEC and CEOC breached those fiduciary duties by compelling CEOC to enter into 

transactions that were against CEOC’s interests, benefited CEC at CEOC’s expense, did not 

provide a fair price to CEOC, and did not result from a fair process. 

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450. The CEC Conflicted Directors and individual directors, the Sponsors, and the 

Sponsors’ officers and agents knowingly participated in those breaches of fiduciary duty in the 

following ways: 

a. by virtue of their power to appoint the entire board of CEC and the fact 

that a majority of the directors of CEC’s board were officers of Apollo and 

TPG, the Sponsors dominated and controlled the actions of CEC’s board 

and CEOC’s board; 

b. Apollo conceived, designed, and structured the transaction, including the 

selection of CEOC assets to be sold and the creation of CAC and Growth 

Partners, to receive and hold the properties for the benefit of CEC and the 

Sponsors; 

c. although the Sponsors understood that the transaction was designed to 

allow CEC and the Sponsors to maintain control of CEOC assets with 

significant growth potential, transfer those assets beyond the reach of 

CEOC’s creditors, and better position CEC and the Sponsors for CEOC’s 

restructuring or bankruptcy, they did not disclose these intentions to 

CEOC’s board; 

d. Apollo assisted in the preparation of a script used to present the proposed 

transaction to the CEC board in November 2012, which outlined 

numerous expected benefits of the transaction but omitted any reference to 

CEOC’s insolvency, the litigation and bankruptcy-related risks of the 

transaction, and the underlying goals of the transaction; 

e. despite their knowledge that CEC and CEOC had divergent interests, the 

Sponsors exploited the conflicts of interest of CEOC board members who 

sat on CEC’s board or were officers of CEC; 

f. the CEC Conflicted Directors and individual directors, the Sponsors and 

the Sponsors’ officers and agents allowed Paul Weiss to represent all 

entities in the deal, thus depriving CEOC of independent legal counsel and 

facilitating the Sponsors and CEC’s scheme to deprive CEOC of fair price 

and fair process; 

g. the Sponsors negotiated financial terms which did not provide CEOC 

reasonably equivalent value for the transferred assets; 

h. the Sponsors manipulated the valuation process by, among other things, 

withholding updated projections, providing or instructing others to provide 

misleading and incomplete information regarding the impact of the 

Britney Spears contract, and instructing or allowing Evercore to use 

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incorrect ownership assumptions regarding the percentage of CEOC’s 

interest in the Horseshoe Baltimore; and 

i. the CEC Conflicted Directors and individual directors, the Sponsors, and 

the Sponsors’ officers misstated that the purpose of the transaction was to 

increase CEOC’s liquidity, when in truth a central purpose of the 

transaction was to fund CEOC’s repayment of over $400 million to CEC 

under the Intercompany Revolver during the same time the transaction 

was being developed. 

451. The CEC Conflicted Directors and individual directors and the Sponsors are liable 

for aiding and abetting breaches of fiduciary duty in connection with the 2013 Transfers. 

452. CEOC has been injured by these breaches of fiduciary duties in an amount to be 

determined. 

Civil Conspiracy 

453. Starting in mid-2012, the Conflicted Directors agreed and conspired to commit 

unlawful acts, including to fraudulently transfer CEOC’s valuable assets, breach fiduciary duties 

owed to CEOC, engage CEOC in damaging financial transactions, and otherwise delay, hinder, 

and defraud CEOC and its creditors. Each of the conspirators intentionally participated in this 

scheme. The 2013 Transfers constitute an overt act taken in furtherance of the conspirators’ 

unlawful scheme. The conspirators’ actions in creating, structuring, negotiating, evaluating, and 

approving the transfer, as more fully detailed herein, constitute further overt acts taken in 

furtherance of their unlawful scheme. 

454. The 2013 Transfers including the transfer of Planet Hollywood and Baltimore 

Horseshoe, the conspirators’ overt acts in furtherance of that transfer, and the conspirators’ 

overall scheme and agreement to fraudulently transfer CEOC’s valuable assets, breach fiduciary 

duties owed to CEOC, engage CEOC in damaging financial transactions, and otherwise delay, 

hinder, and defraud CEOC and its creditors caused damages to CEOC in an amount to be 

determined. 

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CLAIM VIII 

ACCESS TO TOTAL REWARDS AND 

CEOC’S PROPERTY MANAGEMENT SERVICES 

(Nev. Rev. Stat. §§ 112.180, 112.190, 112.210; 6 Del. C. §§ 1304, 1305, 1307; and 

11 U.S.C. §§ 544, 548(a)(1)(A),(B), 550) 

(Fraudulent Transfer, Breach Of Fiduciary Duty, Aiding & Abetting 

Breach Of Fiduciary Duty)

Services Transferees, CEC, Sponsors, CEC Conflicted Directors, 

Loveman, Benjamin, Housenbold, Kleisner, Peterson, Press, Swann and Williams 

455. Plaintiffs repeat and reallege paragraphs 1 through 454. 

Fraudulent transfer 

456. At all relevant times, CEOC has been insolvent. 

457. Throughout the relevant period, CEC, the directors of CEC, and the Sponsors 

completely dominated and controlled CEOC and all of CEOC’s subsidiaries and affiliates. 

458. At all relevant times, CEC and the Sponsors owned, controlled, and dominated 

the CMBS Properties, CERP, and Growth Partners. 

459. As part of the 2010 CMBS Loan Agreement Amendment, CEC directed CEOC to 

enter into the Shared Services Agreement with the CMBS PropCos under which CEOC would 

provide management services and access to Total Rewards to the CMBS Properties for no 

consideration. In October 2013, a new Shared Services Agreement was executed, which 

required CEOC to provide these same services to CERP on the same basis. That same month, 

CEC had CEOC enter into the Management Services Agreement, which required CEOC to 

continue to provide management services for Planet Hollywood and Horseshoe Baltimore, as 

well as to provide Growth Partners’ properties with access to Total Rewards. 

460. The 2010 Shared Services Agreement, the 2013 Shared Services Agreement, and 

the Management Services Agreement were constructive fraudulent transfers because CEOC 

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received inadequate consideration and less than reasonably equivalent value for the services it 

was required to perform and for the access it was required to give to its Total Rewards program. 

461. In addition, the 2010 Shared Services Agreement, the 2013 Shared Services 

Agreement, and the Management Services Agreement were actual fraudulent transfers. 

Evidence of fraudulent intent includes the facts that: 

a. these agreements were designed and intended to benefit CEC and the 

Sponsors by allowing properties they owned or controlled to access Total 

Rewards free of charge and to obtain property management services for 

little to no consideration; 

b. these agreements were designed and intended to better position CEC and 

the Sponsors for CEOC’s restructuring or bankruptcy by ensuring that 

properties they owned or controlled would have continued access to Total 

Rewards and to CEOC’s property management services and that CEOC 

itself would not control these irreplaceable strategic assets; 

c. CEOC, CEC, the Sponsors, the Service Transferees, and the individual 

defendants understood that CEOC was insolvent on and after the date of 

each agreement, as evidenced by, inter alia, multiple CEC and Sponsor 

analyses indicating CEOC had a negative equity value and would be 

unable to repay its debts, and the decision to create bankruptcy remote 

entities to receive and hold valuable CEOC assets; 

d. despite the fact that CEC and CEOC had divergent interests, the transfers 

were proposed, negotiated, structured, evaluated, and approved through a 

process that failed to involve or protect the interests of CEOC; 

e. the agreements benefitted CAC, Growth Partners, CES and other newly 

created entities that were owned and controlled by CEC and the Sponsors; 

f. the value of the consideration received by CEOC was not reasonably 

equivalent to the value of the benefit conferred; 

g. although it was CEOC that performed the services under the 2010 and 

2013 Shared Services Agreements, payment for this work was made to 

CEC, with CEOC receiving only reimbursement for its allocated cost of 

providing these services and 30% of unallocated corporate expenses; 

h. under the Management Services Agreement, CEOC received minimal 

compensation, including reimbursement of out-of-pocket costs, a 10% 

profit margin on certain costs, and management fees tied to the properties’ 

performance; and 

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i. the agreements substantially impaired CEOC’s future ability to service its 

debt. 

462. The transfers of the 2010 Shared Services Agreement, the 2013 Shared Services 

Agreement and the Management Services Agreement are avoidable and recoverable, and the 

Services Transferees are liable for the constructive and actual fraudulent transfer of the 2010 

Shared Services Agreement, the 2013 Shared Services Agreement, and the Management Services 

Agreement. 

Breaches Of Fiduciary Duty By CEC And CEC’s Directors 

463. At the time of the 2010 Shared Services Agreement, the 2013 Shared Services 

Agreement, and the Management Services Agreement, the CMBS PropCos, CERP and Growth 

Partners were direct or indirect subsidiaries or affiliates of CEC. Thus, these contracts were 

self-dealing transactions. 

464. The price paid to CEOC for the services it was to perform for the CMBS 

PropCos, CERP, and Growth Partners and for the access CEOC was to provide to Total Rewards 

was far below the value of those services, and that access and was not entirely fair to CEOC. 

465. The process by which CEC initiated, structured, and negotiated the transaction 

was not entirely fair to CEOC. CEC conceived of the approach of having CEOC enter into the 

2010 Shared Services Agreement, the 2013 Shared Services Agreement, and the Management 

Services Agreement as a means of benefiting the CMBS PropCos, CERP, and Growth Partners, 

and decided upon the general terms and conditions of those contracts. There were no meaningful 

negotiations between CEOC and the CMBS PropCos, CERP, and Growth Partners about the 

price, terms or conditions of the contracts, and CEC took no steps to ensure the contracts’ 

fairness to CEOC. Moreover, CEC used its dominance and control over CEOC to ensure that 

CEOC lacked independent directors, financial advisors and legal counsel necessary to fairly 

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evaluate the transactions, and CEC proposed the transactions to CEOC knowing that CEOC 

lacked the independent governance or resources to fairly evaluate the transactions. 

466. CEC breached its fiduciary duties to CEOC. 

467. The CEC Conflicted Directors and individual directors, who individually owed 

fiduciary duties to CEOC, breached those fiduciary duties. 

Breaches Of Fiduciary Duty By CEOC’s Directors 

468. At the time the 2010 Shared Services Agreement was executed, Loveman and 

Halkyard were the only directors of CEOC. Loveman and Cohen were CEOC’s only directors at 

the time the 2013 Shared Services Agreement and the Management Services Agreement 

contracts were executed. 

469. Loveman breached his fiduciary duties to CEOC by approving, authorizing, and 

facilitating a transaction that was not in the best interests of CEOC. 

470. Notwithstanding his fiduciary duties to CEOC, at no point did Loveman constitute 

a committee of independent directors to consider the transactions, ask for or receive an opinion 

about the fairness of the contracts to CEOC, or take any steps to consider the fairness of the 

contracts to CEOC. Loveman breached his fiduciary duties to CEOC by approving the 2010 

Shared Services Agreement, the 2013 Shared Services Agreement, and the Management Services 

Agreement when he had disqualifying conflicts of interest, and by failing to observe the 

governance processes that were required when considering a self-dealing transaction. 

471. CEOC has been injured by these breaches of fiduciary duties in an amount to be 

determined. 

CLAIM IX 

TRANSFER OF BALLY’S LAS VEGAS, THE CROMWELL, 

THE QUAD & HARRAH’S NEW ORLEANS 

(Nev. Rev. Stat. §§ 112.180, 112.190, 112.210; 6 Del. C. §§ 1304, 1305, 1307; and 

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11 U.S.C. §§ 544, 548(a)(1)(A),(B), 550) 

(Fraudulent Transfer, Breach Of Fiduciary Duty, Aiding & Abetting 

Breach Of Fiduciary Duty, Civil Conspiracy)

2014 Transferees, CEC, Sponsors, CEC Conflicted Directors, 

Kleisner, Loveman, Rowan, Sambur, Benjamin, Housenbold, Press, Swann, and Williams 

472. Plaintiffs repeat and reallege paragraphs 1 through 471. 

Fraudulent Transfer 

473. At all relevant times, CEOC has been insolvent. 

474. Throughout the relevant period, CEC, the directors of CEC, and the Sponsors 

completely dominated and controlled CEOC and all of CEOC’s subsidiaries and affiliates. 

475. On March 1, 2014, CEOC entered into the 2014 Transaction Agreement that 

required CEOC subsidiaries to transfer Bally’s Las Vegas, The Cromwell, The Quad, and 

Harrah’s New Orleans, along with 50% of the management fees payable to CEOC by those 

properties (together, the “Four Properties”) to Growth Partners and entities affiliated with 

Growth Partners (the “2014 Transferees”). 

476. At all relevant times, CEC and the Sponsors owned, controlled, and dominated 

the 2014 Transferees. 

477. The consideration for the transfers was $1.815 billion in cash and the assumption 

of $185 million in debt. 

478. The Four Properties Transfer was a constructive fraudulent transfer because 

CEOC received inadequate consideration and less than reasonably equivalent value for them. 

479. In addition, the Four Properties Transfer was an actual fraudulent transfer because 

the purpose and effect of the transfers was to hinder or delay CEOC’s creditors by placing 

critical and valuable assets beyond their reach. Evidence of fraudulent intent includes the facts 

that: 

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a. CEC and the Sponsors conceived of the transaction and identified the 

properties to be transferred; 

b. CEC and the Sponsors selected four of CEOC’s most valuable properties 

to transfer to Growth Partners, including three Las Vegas properties 

located at the center of the Las Vegas Strip and its flagship New Orleans 

casino; 

c. the proposal to sell these properties was presented to the CEC board as a 

management proposal, even though it had been conceived by the 

Sponsors; 

d. the transaction was designed and intended to allow CEC and the Sponsors 

to take control of CEOC assets with significant growth potential, transfer 

those assets beyond the reach of CEOC’s creditors, and better position 

CEC and the Sponsors for CEOC’s restructuring or bankruptcy; 

e. CEOC, CEC, the Sponsors, the 2014 Transferees, and the individual 

defendants understood that CEOC was insolvent on and after the date of 

each transfer, as evidenced by, inter alia, multiple CEC and Sponsor 

analyses indicating CEOC had a negative equity value and would be 

unable to repay its debts, the creation of bankruptcy remote entities to 

receive and hold valuable CEOC assets, and the CEC Special Committee’s 

refusal to provide a representation that CEOC was solvent, as requested by 

the CAC Special Committee in connection with the transaction; 

f. despite the fact that CEC and CEOC had divergent interests, the transfers 

were proposed, negotiated, structured, evaluated, and approved through a 

process that failed to involve or protect the separate interests of CEOC; 

g. the Sponsors recruited outside directors for CEOC in February 2014, but 

decided they would not join the CEOC board until the transfer of the 

assets to Growth Partners was complete; 

h. the CEC Special Committee lacked the authority to market any of these 

assets to third parties; 

i. the transfers were to newly created affiliates of CEC, owned and 

controlled by CEC and the Sponsors; 

j. CEC and the Sponsors retained control and ownership of the assets; 

k. CEC and the Sponsors retained Duff & Phelps to provide an opinion that 

the transaction was “on terms no less favorable to CEOC . . . than would 

be obtained in a comparable arm’s-length transaction with a person that is 

not an affiliate of [CEC],” but did not ask Duff & Phelps to opine whether 

the transaction was fair to CEOC; 

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l. with the knowledge and encouragement of the Sponsors, CEC and 

members of the CEC board, CEC prepared flawed, transaction-specific, 

non-ordinary course projections of EBITDA for the four properties and 

conveyed them to Duff & Phelps with the knowledge and expectation that 

Duff & Phelps would rely upon them and consequently issue an opinion 

that the consideration CEOC was to receive in the transaction was 

comparable to that CEOC would have received in an arm’s-length 

transaction; the Sponsors pushed back on any attempt to have CEOC 

receive its own fairness opinion and ultimately succeeded in having the 

banks that had requested fairness opinions relent from their request; 

m. negotiations over the price of the transfer occurred between CEC director 

Kleisner and CAC director Beilinson, without any participation from 

CEOC; 

n. the value of the consideration received by CEOC was not reasonably 

equivalent to the value of the assets transferred; 

o. the transfer substantially impaired CEOC’s future ability to service its 

debt; and 

p. the putative purpose of the transfer—to provide CEOC with short-term 

liquidity—is inconsistent with efforts, taken during the time the transfer 

was developed, to transfer cash from CEOC to CEC and Growth Partners. 

480. The Four Properties Transfer is avoidable and recoverable, and the 2014 

Transferees are liable for the constructive and fraudulent transfer of the Four Properties. 

Breaches Of Fiduciary Duty By CEC And CEC’s Directors 

481. At the time of the Four Properties Transfer, the 2014 Transferees were direct or 

indirect subsidiaries or affiliates of CEC. Thus, the Four Properties Transfers were self-dealing 

transactions. 

482. The price paid to CEOC for the Four Properties Transfer was far below the value 

of the assets and was not entirely fair to CEOC. 

483. In addition, CEC knew that transferring the four properties from CEOC to Growth 

Partners and the other 2014 Transferees would make it even more difficult for CEOC to pay its 

debts and would hasten CEOC’s bankruptcy. 

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484. Notwithstanding CEC’s fiduciary duties to CEOC, CEC conceived of, structured, 

priced, closed, and implemented the Four Properties Transfer to further CEC’s own interests to 

the direct injury of CEOC. 

485. The process by which CEC initiated, structured, negotiated and disclosed the 

transaction was not entirely fair to CEOC. Although CEC and CAC both formed special 

committees of their boards to structure and negotiate the price of the transaction, those 

committees represented the interests of CEC and CAC, and not the interests of CEOC. 

Similarly, although both of those special committees hired financial advisors to assist them, no 

independent advisors were retained to represent or assist CEOC, and CEOC did not ask for or 

receive an independent fairness opinion. Nor did CEOC have independent legal advisors. In 

fact, the law firm representing CEOC on the four properties transactions was Paul Weiss, the 

same law firm that represented CEC. 

486. CEC breached its fiduciary duties to CEOC. 

487. The CEC Conflicted Directors and individual directors, who individually owed 

fiduciary duties to CEOC, breached those fiduciary duties. 

488. CEC director Kleisner was negotiating the price of the four properties with one of 

the directors of CAC. Kleisner was a fiduciary of CEOC because he was a CEC director and the 

CEC board had taken over the functions of the CEOC board. In addition, Kleisner was a 

fiduciary of CEOC because he was an agent expressly acting on CEOC’s behalf with the 

responsibility of negotiating the price and terms and conditions upon which the four properties 

would be sold to Growth Partners. 

489. Kleisner was aware that Duff & Phelps would rely upon projections of EBITDA 

for the four properties in reaching its opinion and that CEOC had developed such projections in 

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the ordinary course of its business. In violation of his fiduciary duties, Kleisner directed 

members of CEC’s financial staff to prepare a set of inaccurate projections known as the 

February Business Plan that materially understated the projected EBITDA for the four 

properties. Kleisner knew that the February Business Plan was inaccurate and non-ordinary 

course, but nonetheless had the CEC financial staff provide it to Duff & Phelps with the intention 

Duff & Phelps would rely upon it. Duff & Phelps did so, with the result that the four properties 

were significantly undervalued. 

490. Kleisner breached his fiduciary duties in directing CEC to prepare the February 

Business Plan and to provide it to Duff & Phelps. 

Breaches Of Fiduciary Duty By CEOC’s Directors 

491. Although the four properties were some of CEOC’s most valuable assets, CEOC 

itself was not party to the negotiations about the transaction or the amount of money it would be 

paid for these assets. Instead, CEC and the Sponsors excluded CEOC from those discussions, 

which occurred between one of the CEC directors (Kleisner) and one of the CAC directors 

(Beilinson). 

492. The CEC special committee hired Duff & Phelps as its financial advisor to render 

an opinion whether the terms of the transaction were no less favorable to CEOC than an 

arm’s-length negotiation would have produced. However, members of that committee, 

representatives from Apollo, and others provided Duff & Phelps with inaccurate transactionspecific, non-ordinary course information about the business and its prospects of the four 

properties. In particular, they had CEC prepare non-ordinary course, transaction-specific 

projections called the February Business Plan that provided inaccurate, depressed forecasts for 

the future earnings of the four properties. As a result, Duff & Phelps was led into incorrectly 

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believing that the consideration being paid for the assets was equivalent to that CEOC would 

have received in a true arm’s-length transaction. 

493. There was no marketing process for the sale of these assets. While these four 

properties were enormously valuable, no effort was made by CEC, CEOC or anyone else to 

solicit any third-party bids, offers or proposals for buying the properties. 

494. At the time of the Four Properties Transfer, CEOC’s board—consisting solely of 

Loveman and Hession—approved the transaction by signing a boilerplate written consent. Both 

Loveman and Hession were conflicted. Loveman was CEC’s Chairman and Chief Executive 

Officer. Hession was CEC’s Chief Financial Officer. Both Loveman and Hession owned stock 

in CAC and, therefore, stood to benefit personally from the below-market price at which CEOC 

had sold the four properties to Growth Partners. 

495. Loveman breached his fiduciary duties to CEOC by approving, authorizing, and 

facilitating a transaction that was not in the best interests of CEOC. 

496. Loveman also breached his fiduciary duties to CEOC by failing to ensure that 

CEOC received a fair price for these assets or that a fair process was followed. Loveman did not 

consider using a marketing process for the sale of these assets; made no effort to solicit any 

third-party bids, offers, or proposals; made no effort to convene or create a special committee of 

independent directors to review the transaction; did not ask for or receive an independent opinion 

about the fairness of the transaction to CEOC; did not retain independent lawyers or advisors to 

represent CEOC; and made no analysis of CEOC’s solvency. 

497. CEOC’s board did not hold a meeting to consider the sale of the four properties. 

Instead, Loveman and Hession approved the transaction by signing a boilerplate written consent. 

In failing to reach an informed opinion, in ignoring basic principles of governance, and in voting 

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to approve the four properties transaction while they had disqualifying conflicts of interest, 

Loveman breached his fiduciary duties to CEOC. 

Aiding & Abetting Breaches Of Fiduciary Duty 

498. The CEC Conflicted Directors, the Sponsors, and the Sponsors’ officers and 

agents knew that CEC, as CEOC’s controlling stockholder, and the boards of CEC and CEOC 

owed fiduciary duties to CEOC. The CEC Conflicted Directors, the Sponsors, and the Sponsors’ 

officers and agents knew or should have known that CEC and the boards of CEC and CEOC 

breached those fiduciary duties by compelling CEOC to enter into transactions that were against 

CEOC’s interests, benefited CEC at CEOC’s expense, did not provide a fair price to CEOC, and 

did not result from a fair process. 

499. The CEC Conflicted Directors, the Sponsors, and the Sponsors’ officers and 

agents knowingly participated in those breaches of fiduciary duty in the following ways: 

a. by virtue of their power to appoint the entire board of CEC and the fact 

that a majority of the directors of CEC’s board were officers of Apollo and 

TPG, the Sponsors dominated and controlled the actions of CEC’s board 

and CEOC’s board; 

b. Apollo conceived, designed, and structured the transaction, including the 

selection of CEOC assets to be sold; 

c. the CEC Conflicted Directors and individual directors, the Sponsors, and 

the Sponsors’ officers negotiated and implemented the transaction, even 

though it was not in CEOC’s best interests; 

d. CEC and the Sponsors selected four of CEOC’s most valuable properties 

to transfer to Growth Partners, including three Las Vegas properties 

located at the center of the Las Vegas Strip and its flagship New Orleans 

casino; 

e. although the Sponsors understood that the transaction was designed to 

allow CEC and the Sponsors to take control of CEOC assets with growth 

potential, transfer those assets beyond the reach of CEOC’s creditors, and 

better position CEC and the Sponsors for CEOC’s restructuring or 

bankruptcy, they did not disclose these intentions to CEOC’s board; 

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f. the Sponsors caused the CEC board to instruct CEOC to sell assets on the 

pretext of improving CEOC’s ability to service its debt, even though they 

fully knew that selling the highly profitable Bally’s Las Vegas, Cromwell, 

Quad and Harrah’s New Orleans would reduce CEOC’s earnings 

materially and make it more difficult for CEOC to service its debt; 

g. The Sponsors made the decision that CEOC should use the proceeds of the 

sale to pay off the balances on its Intercompany Revolver with CEC, even 

though CEOC was desperately short of cash and the repayment would 

benefit CEC to the detriment of CEC’s creditors; 

h. the transaction was presented to the CEC board as a management 

proposal, even though it had been conceived by the Sponsors; 

i. the proposal, which was crafted by the Sponsors, omitted any discussion 

of CEOC’s insolvency, the litigation and bankruptcy-related risks of the 

transaction, and the underlying goals of the transaction; 

j. despite their knowledge that CEC and CEOC had divergent interests, the 

Sponsors exploited the conflicts of interest of CEOC board members who 

sat on CEC’s board or were officers of CEC; 

k. the Sponsors understood that CEOC was insolvent on and after the date of 

each transfer, as evidenced by, inter alia, multiple analyses the Sponsors 

had prepared or seen indicating CEOC had a negative equity value and 

would be unable to repay its debts, the creation of bankruptcy remote 

entities to receive and hold valuable CEOC assets, and the CEC Special 

Committee’s refusal to provide a representation that CEOC was solvent, 

as requested by the CAC Special Committee in connection with the 

transaction; 

l. the Sponsors recruited outside directors for CEOC in February 2014, but 

decided they would not join the CEOC board until the transfer of the 

assets to Growth Partners was complete; 

m. the Sponsors determined that the properties would not be marketed to any 

third parties and would stay within the Caesars enterprise; 

n. the Sponsors retained Duff & Phelps to provide an opinion that the 

transaction was “on terms no less favorable to CEOC . . . than would be 

obtained in a comparable arm’s-length transaction with a person that is not 

an affiliate of [CEC]” but did not ask Duff & Phelps to opine as to 

whether the transaction was fair to CEOC; 

o. upon information and belief, the Sponsors were aware that Duff & Phelps 

had been instructed to rely upon incomplete and inaccurate transactionspecific, non-ordinary course financial projections, yet did nothing to 

ensure that correct information was given to them instead; 

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p. officers of the Sponsors attended the CEC board meetings where the Four 

Properties Transaction was discussed, and voted to approve the transaction 

notwithstanding the fact that it was a breach of CEC’s fiduciary duties to 

CEOC; and 

q. the Sponsors pushed back on having CEOC receive its own fairness 

opinion and ultimately succeeded in having the banks that requested 

fairness opinions relent. 

500. The CEC Conflicted Directors and individual directors and the Sponsors are liable 

for aiding and abetting breaches of fiduciary duties relating to the transfer of the Four Properties. 

Civil Conspiracy 

501. Starting in mid-2012, the Conflicted Directors agreed and conspired to commit 

unlawful acts, including to fraudulently transfer CEOC’s valuable assets, breach fiduciary duties 

owed to CEOC, engage CEOC in damaging financial transactions, and otherwise delay, hinder, 

and defraud CEOC and its creditors. Each of the conspirators intentionally participated in this 

scheme. The Four Properties Transfer constitutes an overt act taken in furtherance of the 

conspirators’ unlawful scheme. The conspirators’ actions in creating, structuring, negotiating, 

evaluating, and approving the transfer, as more fully detailed herein, constitute further overt acts 

taken in furtherance of their unlawful scheme. 

502. The Four Properties Transfer, the conspirators’ overt acts in furtherance of that 

transfer, and the conspirators’ overall scheme and agreement to fraudulently transfer CEOC’s 

valuable assets, breach fiduciary duties owed to CEOC, engage CEOC in damaging financial 

transactions, and otherwise delay, hinder, and defraud CEOC and its creditors caused damages to 

CEOC in an amount to be determined. 

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CLAIM X 

2011 EASEMENT ON UNDEVELOPED LAND 

(Nev. Rev. Stat. §§ 112.180, 112.190, 112.210; 6 Del. C. §§ 1304, 1305, 1307; and 

11 U.S.C. §§ 544, 550) 

(Fraudulent Transfer, Breach of Fiduciary Duty)

CEC, Easement Transferees, Benjamin, Bonderman, Davis, Loveman, Peterson, Press, 

Rowan, Sambur, Swann, and Williams 

503. Plaintiffs repeat and reallege paragraphs 1 through 502. 

Fraudulent Transfer 

504. At all relevant times, CEOC has been insolvent. 

505. In 2011, various CEOC affiliates granted easements to the Easement Transferees, 

all of which were affiliates of CEC, on four lots of unimproved Las Vegas real estate (the 

“Easement Transfer”). 

506. Two of the Easement Transferees make an annual payment to CEOC for granting 

the easements of about $1.7 million, subject to annual 3% increases; however, a third Easement 

Transferee—Flamingo Las Vegas PropCo—has paid nothing for the easement granted to it. 

Granting the easement diminished CEOC’s value by as much as $60 million, and 

correspondingly increased the value received by the Easement Transferees. 

507. At all relevant times, CEC and the Sponsors owned, controlled, and dominated 

the Easement Transferees. 

508. The Easement Transfer was a constructive fraudulent transfer because CEOC 

received inadequate consideration and less than reasonably equivalent value for the easements. 

509. The Easement Transfer is avoidable and recoverable, and the Easement 

Transferees are liable for the constructive fraudulent transfer of the aforementioned easements. 

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Breaches Of Fiduciary Duty By CEC And CEC’s Directors 

510. At the time of the granting of the easements, the Easement Transferees were 

direct or indirect subsidiaries or affiliates of CEC. Thus, the granting of the easements was a 

self-dealing transaction. 

511. The price paid to CEOC for the granting of the easements was far below the value 

of the asset and was not entirely fair to CEOC. 

512. The process by which CEC initiated, structured, negotiated, and disclosed the 

transaction was not entirely fair to CEOC. There is no evidence that CEOC was even consulted 

in connection with CEC’s decision to have the easements granted. 

513. CEC breached its fiduciary duties to CEOC. 

514. The CEC Conflicted Directors and individual directors, who individually owed 

fiduciary duties to CEOC, breached those fiduciary duties. 

Breaches Of Fiduciary Duty By CEOC’s Directors 

515. At the time the easements were granted, CEOC’s only directors were Gary 

Loveman and Jonathan Halkyard. Loveman was the Chairman and Chief Executive Officer of 

CEC, and Halkyard was CEC’s Chief Financial Officer. As a result, neither Loveman nor 

Halkyard was independent of CEC in making decisions affecting CEOC. 

516. Loveman breached his fiduciary duties to CEOC by approving, authorizing, and 

facilitating a transaction that was not in the best interests of CEOC. 

517. There is no evidence that CEOC followed any governance process in reaching the 

decision to grant the easement, that it used any marketing process, that it offered the easements 

to any third party on an arm’s-length basis, that the decision to grant the easement was made by 

disinterested directors of CEOC, that CEOC engaged independent financial or legal advisors to 

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review the granting of the easement, or that CEOC requested or received a fairness opinion about 

the transfer. As a result, the process by which the easements were granted was not fair to CEOC. 

518. In addition, and upon information and belief, Loveman breached his duty of care 

to CEOC by failing to inform himself of transfers of assets from CEOC to CEC or affiliates of 

CEC, thus allowing the granting of the easements to take place without CEOC receiving 

adequate compensation for the easements. 

519. CEOC has been injured by these breaches of fiduciary duties in an amount to be 

determined. 

CLAIM XI 

TRANSFER OF UNDEVELOPED LAND IN LAS VEGAS 

(Nev. Rev. Stat. §§ 112.180, 112.190, 112.210; 6 Del. C. §§ 1304, 1305, 1307; and 

11 U.S.C. §§ 544, 548(a)(1)(A),(B), 550) 

(Fraudulent Transfer, Breach Of Fiduciary Duty, Aiding & Abetting 

Breach Of Fiduciary Duty, Civil Conspiracy)

2014 Transferees, CEC, Sponsors, Loveman, 

CEC Conflicted Directors, Benjamin, Housenbold, Kleisner, Press, Swann and Williams 

520. Plaintiffs repeat and reallege paragraphs 1 through 519. 

Fraudulent Transfer 

521. At all relevant times, CEOC has been insolvent. 

522. Throughout the relevant period, CEC, the directors of CEC, and the Sponsors 

completely dominated and controlled CEOC and all of CEOC’s subsidiaries and affiliates. 

523. On March 1, 2014, CEOC entered into the 2014 Transaction Agreement which, 

among other things, required CEOC subsidiaries to transfer to Growth Partners and entities 

affiliated with Growth Partners (the “2014 Transferees”) 31 acres of undeveloped land in 

Las Vegas. 

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524. At all relevant times, CEC and the Sponsors owned, controlled, and dominated 

the 2014 Transferees. 

525. CEOC was paid no cash consideration for the transfer of this undeveloped land 

and, upon information and belief, was paid no consideration at all for it. 

526. The transfer of the undeveloped land was a constructive fraudulent transfer 

because CEOC received inadequate consideration and less than reasonably equivalent value for 

it. 

527. In addition, the transfer of the undeveloped land was an actual fraudulent transfer 

because the purpose and effect of the transfer was to hinder or delay CEOC’s creditors by 

placing critical and valuable assets beyond their reach. Evidence of fraudulent intent includes 

the facts that: 

a. the Sponsors, and Apollo in particular, conceived of the transaction and 

identified the land to be transferred; 

b. the transaction was designed and intended to allow CEC and the Sponsors 

to take control of CEOC assets with significant growth potential, transfer 

those assets beyond the reach of CEOC’s creditors, and better position 

CEC and the Sponsors for CEOC’s restructuring or bankruptcy; 

c. CEOC, CEC, the Sponsors, the 2014 Transferees, and the individual 

defendants understood that CEOC was insolvent on and after the date of 

each transfer, as evidenced by, inter alia, analyses prepared by CEC and 

the Sponsors indicating that CEOC had a negative equity value and would 

be unable to repay its debts, the creation of bankruptcy remote entities to 

receive and hold valuable CEOC assets, and the CEC Special Committee’s 

refusal to provide a representation that CEOC was solvent, as requested by 

the CAC Special Committee in connection with the transaction; 

d. despite having knowledge that CEC and CEOC had divergent interests, 

CEC, Growth Partners, the CEC board, and the Sponsors arranged for and 

executed the land transfer without any negotiations with CEOC; 

e. the land transferred was never offered to a true third-party buyer or subject 

to any marketing process; 

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f. the transfers were to newly created affiliates of CEC, owned and 

controlled by CEC and the Sponsors; 

g. CEC and the Sponsors retained control and ownership of the assets; 

h. CEOC did not receive any consideration for this land, and no value was 

attributed to this land in CEOC’s internal analysis, CEC’s internal 

analysis, or in the Centerview, Lazard, or Duff & Phelps opinions; 

i. neither Centerview, Lazard, Duff & Phelps, Kleisner, Beilinson, nor 

Loveman was aware that the undeveloped land was being transferred; 

j. the transfer of the land was not disclosed in the March 3, 2014 disclosure 

of the Four Properties Transaction or in the May 6, 2014 8-Ks; and 

k. the transfer impaired CEOC’s future ability to service its debt. 

528. The transfer of the undeveloped land in Las Vegas is avoidable and recoverable, 

and the 2014 Transferees are liable for the constructive and fraudulent transfer of undeveloped 

land in Las Vegas. 

Breaches Of Fiduciary Duty By CEC And CEC’s Directors 

529. At the time of the transfers of the undeveloped land, the 2014 Transferees were 

direct or indirect subsidiaries or affiliates of CEC. Thus, the transfer of the undeveloped land 

was a self-dealing transaction. 

530. The price paid to CEOC for the transfer of the undeveloped land was far below 

the value of the asset and was not entirely fair to CEOC. 

531. The process by which CEC initiated, structured, negotiated and disclosed the 

transaction was not entirely fair to CEOC. Although CEC and CAC both formed special 

committees of their boards to structure and negotiate the price of the transactions that surrounded 

the transfer of the undeveloped land, those committees represented the interests of CEC and 

CAC, and not the interests of CEOC. Similarly, although both of those special committees hired 

financial advisors to assist them, no independent advisors were retained to represent or assist 

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CEOC, and CEOC did not ask for or receive a fairness opinion. Nor did CEOC have 

independent legal advisors. In fact, the law firm representing CEOC on the transaction was 

Paul Weiss, the same law firm that represented CEC. 

532. CEC breached its fiduciary duties to CEOC. 

533. The CEC Conflicted Directors and individual directors, who individually owed 

fiduciary duties to CEOC, breached those fiduciary duties. 

Breaches Of Fiduciary Duty By CEOC’s Directors 

534. Although the undeveloped land was a valuable CEOC asset, CEOC itself was not 

party to the negotiations about the transaction. Instead, CEC and the Sponsors excluded CEOC 

from those discussions which, upon information and belief, occurred between one of the CEC 

directors and one of the CAC directors. 

535. There was no marketing process for the sale of these assets. While the 

undeveloped land was enormously valuable, no effort was made by CEC, CEOC, or anyone else 

to solicit any third-party bids, offers or proposals for buying the property. 

536. At the time the undeveloped land was transferred, CEOC’s only two directors 

were Loveman and Hession. Neither Loveman nor Hession was an independent director, and 

both had interests adverse to CEOC’s. Loveman was CEC’s Chairman and Chief Executive 

Officer, Hession was CEC’s Chief Financial Officer, and both Loveman and Hession owned 

stock in CAC and, therefore, stood to benefit personally from the transfer of the undeveloped 

land. 

537. Loveman breached his fiduciary duties to CEOC by approving, authorizing, and 

facilitating a transaction that was not in the best interests of CEOC. 

538. The transfer of the undeveloped land to Growth Partners and the other 2014 

Transferees was approved by the CEOC board when it approved the 2014 Transaction 

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Agreement. However, there was no presentation to the board about the transfer of the 

undeveloped land or the fact that CEOC was receiving nothing for it. Moreover, the CEOC 

board did not hold a meeting to discuss the transfer of the undeveloped land, or even to discuss 

its approval of the 2014 Transaction Agreement. Instead, CEOC’s two directors—Loveman and 

Hession—approved the transaction by signing a boilerplate written consent. In failing to reach 

an informed opinion, in ignoring basic principles of governance, and in voting to approve the 

2014 Transaction Agreement while they had disqualifying conflicts of interest, Loveman 

breached his fiduciary duties to CEOC. In addition, and upon information and belief, Loveman 

breached his duty of care to CEOC by failing to inform himself of transfers of assets from CEOC 

to CEC or affiliates of CEC, thus allowing the transfer of the undeveloped land to take place 

without CEOC receiving adequate consideration for it. 

Aiding & Abetting Breaches Of Fiduciary Duty 

539. The CEC Conflicted Directors and individual directors, the Sponsors, and the 

Sponsors’ officers and agents knew that CEC, as CEOC’s controlling stockholder, and the 

boards of CEC and CEOC owed fiduciary duties to CEOC. The CEC Conflicted Directors and 

individual directors, the Sponsors, and the Sponsors’ officers and agents knew or should have 

known that CEC and the boards of CEC and CEOC breached those fiduciary duties by 

compelling CEOC to enter into transactions that were against CEOC’s interests, benefited CEC 

at CEOC’s expense, did not provide a fair price to CEOC, and did not result from a fair process. 

540. The CEC Conflicted Directors, the Sponsors, and the Sponsors’ officers and 

agents knowingly participated in those breaches of fiduciary duty in the following ways: 

a. by virtue of their power to appoint the entire board of CEC and the fact 

that a majority of the directors of CEC’s board were officers of Apollo and 

TPG, the Sponsors dominated and controlled the actions of CEC’s board 

and CEOC’s board; 

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b. Apollo conceived, designed, and structured the transaction, including the 

selection of CEOC assets to be sold; 

c. the CEC Conflicted Directors, the Sponsors, and the Sponsors’ officers 

and agents negotiated and implemented the transaction, even though it was 

not in CEOC’s best interests; 

d. although the Sponsors understood that the transaction was designed to 

allow CEC and the Sponsors to take control of CEOC assets with 

significant growth potential, transfer those assets beyond the reach of 

CEOC’s creditors, and better position CEC and the Sponsors for CEOC’s 

restructuring or bankruptcy, they did not disclose these intentions to 

CEOC’s board; 

e. despite their knowledge that CEC and CEOC had divergent interests, the 

Sponsors exploited the conflicts of interest of CEOC board members who 

sat on CEC’s board or were officers of CEC; and 

f. Upon information and belief, Rowan and Sambur knew that the 2014 

Transaction Agreement included provisions for the transfer of the 

undeveloped land from CEOC to Growth Partners and the other 2014 

Transferees for no additional consideration but failed to bring to the 

attention of the full CEC board that this transfer was taking place. 

541. The CEC Conflicted Directors and the Sponsors are liable for aiding and abetting 

breaches of fiduciary duty in connection with the transfer of undeveloped land in Las Vegas. 

542. CEOC has been injured by these breaches of fiduciary duties in an amount to be 

determined. 

Civil Conspiracy 

543. Starting in mid-2012, the Conflicted Directors agreed and conspired to commit 

unlawful acts, including to fraudulently transfer CEOC’s valuable assets, breach fiduciary duties 

owed to CEOC, engage CEOC in damaging financial transactions, and otherwise delay, hinder, 

and defraud CEOC and its creditors. Each of the conspirators intentionally participated in this 

scheme. The Transfer of Undeveloped Land in Las Vegas constitutes an overt act taken in 

furtherance of the conspirators’ unlawful scheme. The conspirators’ actions in creating, 

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structuring, negotiating, evaluating, and approving the transfer, as more fully detailed herein, 

constitute further overt acts taken in furtherance of their unlawful scheme. 

544. The Transfer of Undeveloped Land in Las Vegas, the conspirators’ overt acts in 

furtherance of that transfer, and the conspirators’ overall scheme and agreement to fraudulently 

transfer CEOC’s valuable assets, breach fiduciary duties owed to CEOC, engage CEOC in 

damaging financial transactions, and otherwise delay, hinder, and defraud CEOC and its 

creditors caused damages to CEOC in an amount to be determined. 

CLAIM XII 

DEGRADATION OF CEOC’s ENTERPRISE VALUE 

(Breach of Fiduciary Duty)

CEC, Sponsors, CEC Conflicted Directors, Loveman, Benjamin, Housenbold, Kleisner, 

Peterson, Press, Swann and Williams 

545. Plaintiffs repeat and reallege paragraphs 1 through 544. 

Breaches Of Fiduciary Duty By CEOC’s Directors 

546. At all relevant times, CEOC has been insolvent. 

547. At all relevant times, CEOC had a two person board, consisting of Loveman and 

either Halkyard, Cohen, or Hession. CEOC’s directors owed fiduciary duties to CEOC and to 

CEOC’s ultimate stakeholders. 

548. The structure of the CEOC enterprise had been designed to create a nationwide 

system of regional casinos that would identify customers and, through the use of CEOC’s Total 

Rewards program, feed those customers to CEOC’s high-value casinos in Las Vegas and its 

super-regional casino in New Orleans. As a result, CEOC was valued as a Las Vegas-based 

gaming enterprise instead of a gaming company that was principally regional in nature. 

549. This difference was significant because valuations for gaming enterprises that are 

concentrated in Las Vegas are materially higher than those for regional gaming companies. 

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550. At the direction of the Sponsors and CEC, all but one of CEOC’s Las Vegas 

properties was transferred to affiliates of CEC, including CERP and Growth Partners. 

551. Because the Sponsors and CEC directly and indirectly controlled CERP, Growth 

Partners, and the other transferees, each of these was a self-dealing transaction that was required 

to meet the standard of entire fairness as to the consideration paid to CEOC for the assets and the 

process followed in timing, initiating, structuring, negotiating, and disclosing the transaction and 

in obtaining approval of the transaction by CEOC’s directors. 

552. None of the transfers of CEOC’s Las Vegas properties met this standard. In each 

case, the consideration CEOC received for the property was far below the value of those assets 

and was not entirely fair to CEOC. Similarly, the processes used by CEC, Loveman, Halkyard, 

Cohen, and Hession were not fair to CEOC. 

Breaches Of Fiduciary Duty By CEC And CEC’s Directors 

553. CEC dominated and chose the board of directors of CEOC. Although CEC was 

fully aware that transactions between CEC (or affiliates of CEC) and CEOC would be 

self-dealing transactions that would require fair process, CEC failed to appoint to the CEOC 

board any directors who were independent of CEC. CEC thus deprived CEOC of fair process by 

preventing CEOC from having directors who would be able to independently consider the 

fairness of the transaction. Similarly, CEC deprived CEOC of fair process by proceeding with 

the transfers with knowledge that CEOC did not have independent financial advisors or 

independent legal advisors. By transferring from CEOC its signature properties in Las Vegas 

and its Harrah’s New Orleans casino, CEC relegated CEOC to the status of a regional gaming 

company and, correspondingly, reduced the enterprise value of CEOC. 

554. CEC breached its fiduciary duties to CEOC. 

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555. The CEC Conflicted Directors and individual directors, who individually owed 

fiduciary duties to CEOC, breached those fiduciary duties. 

556. CEOC has been injured by these breaches of fiduciary duties in an amount to be 

determined. 

CLAIM XIII 

TRANSFER OF TOTAL REWARDS 

(Nev. Rev. Stat. §§ 112.180, 112.190, 112.210; 6 Del. C. §§ 1304, 1305, 1307; and 

11 U.S.C. §§ 544, 548(a)(1)(A),(B), 550) 

(Fraudulent Transfer, Breach Of Fiduciary Duty, Aiding & Abetting 

Breach Of Fiduciary Duty, Civil Conspiracy)

Total Rewards Transferees, CEC, Sponsors, CEC Conflicted Directors, 

Loveman, Rowan, Sambur, Benjamin, Housenbold, Kleisner, Press, Swann and Williams 

557. Plaintiffs repeat and reallege paragraphs 1 through 556. 

Fraudulent Transfer 

558. At all relevant times, CEOC has been insolvent. 

559. Throughout the relevant period, CEC, the directors of CEC, and the Sponsors 

completely dominated and controlled CEOC and all of CEOC’s subsidiaries and affiliates. 

560. The 2014 Transaction Agreement required CEOC to transfer to a newly-formed 

company named Caesars Enterprise Services LLC (“CES”) most of CEOC’s intellectual 

property, including its rights to the Total Rewards program and the intangible and tangible 

intellectual property that comprised that program (collectively, “Total Rewards”). Total 

Rewards was of enormous value to CEOC. 

561. CEOC received no consideration in return for transferring Total Rewards to CES 

other than a 69% ownership stake in CES. However, CES was designed to be a flow-through 

entity that was intentionally structured to have no profits. 

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562. The other owners of CES were CERP and Growth Partners. A three-person 

Steering Committee makes all major decisions for CES. CEOC, CERP and Growth Partners 

each has a seat on the Steering Committee. 

563. At all relevant times, CEC and the Sponsors owned, controlled, and dominated 

CERP and Growth Partners. 

564. Pursuant to a series of agreements and licenses between CEOC and CES, CEOC 

conveyed to CES all of the rights and powers that usually accompany ownership of intellectual 

property. Thus, as a practical matter, it is CES, and not CEOC, that controls Total Rewards. 

565. Because of the governance structure of CES, CEOC has no control over the 

governance of CES. Instead, CERP and Growth Partners hold a majority of the votes. 

566. The transfer of Total Rewards to CES was a constructive fraudulent transfer 

because CEOC received inadequate consideration and less than reasonably equivalent value for 

Total Rewards. 

567. In addition, the transfer of Total Rewards was an actual fraudulent transfer 

because the purpose and effect of the transfer was to hinder or delay CEOC’s creditors by 

placing critical and valuable assets beyond their reach. Evidence of fraudulent intent includes 

the facts that: 

a. the Sponsors conceived of the transfer of Total Rewards to a 

bankruptcy-remote entity in late 2013; 

b. the transfer of Total Rewards was designed and intended to give CEC and 

the Sponsors control and dominion of CEOC’s valuable intellectual 

property, transfer assets beyond the reach of CEOC’s creditors, allow 

other Caesars entities to have continued access to CEOC’s intellectual 

property if CEOC entered bankruptcy, and better position CEC and the 

Sponsors for CEOC’s restructuring or bankruptcy; 

c. as part of the Services LLC Agreements, CES sublicensed its intellectual 

property to CERP, Growth Partners, and many other subsidiaries or 

affiliates of CEC, which meant that CERP and Growth Partners obtained a 

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nearly unlimited right to use the Total Rewards program and related 

intellectual property free of charge; 

d. CEOC, CEC, the Sponsors, the 2014 Transferees, and the individual 

defendants understood that CEOC was insolvent on and after the date of 

each transfer, as evidenced by, inter alia, analyses CEC and Sponsor had 

seen or prepared that showed that CEOC had a negative equity value and 

would be unable to repay its debts, the creation of bankruptcy remote 

entities to receive and hold valuable CEOC assets, and the CEC Special 

Committee’s refusal to provide a representation that CEOC was solvent, 

as requested by the CAC Special Committee in connection with the 

transaction; 

e. despite their knowledge that CEC and CEOC had divergent interests, the 

Sponsors and CEC proposed, negotiated, structured, evaluated, and 

approved the transfer of Total Rewards through a process that failed to 

involve or protect the interests of CEOC; 

f. control of Total Rewards was transferred to a newly-created shared 

services company, controlled by CEC and the Sponsors; 

g. the value of the consideration received by CEOC was not reasonably 

equivalent to the value of the assets transferred; 

h. the transfer substantially impaired CEOC’s future ability to service its 

debt; 

i. the Services LLC Agreements granted CEOC a 69% ownership stake but 

only 33% of the voting rights; 

j. the Services LLC Agreements transferred effective control of Total 

Rewards to CERP and Growth Partners, enriching them at CEOC’s direct 

expense, by terminating CEOC’s governance rights in the event of its 

bankruptcy, prohibiting CEOC from assigning its interest in CES or 

withdrawing from CES without the consent of CERP and Growth 

Partners, requiring CEOC to transfer most of its employees to CES, 

requiring CEOC to transfer the know-how at the heart of Total Rewards to 

CES, and licensing CES and its sublicensees to create derivative works 

using the licensed and sublicensed intellectual property; 

k. Apollo participated in the drafting the terms of these Services LLC 

Agreements; 

l. CEOC did not negotiate any of these terms and did not have any 

independent financial or legal advisors to review them; and 

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m. the two CEOC directors who approved this transfer via written consent 

were senior executives at CEC and shareholders of CAC, and thus had a 

financial interest in the Growth Partners receipt of these benefits. 

568. The transfer of Total Rewards is avoidable and recoverable, and the Total 

Rewards Transferees are liable for the constructive and actual fraudulent transfer of Total 

Rewards. 

Breaches Of Fiduciary Duty By CEC And CEC’s Directors 

569. At the time of the transfer of Total Rewards to CES, CERP and Growth Partners 

were direct or indirect subsidiaries or affiliates of CEC. Thus, the transaction was a related party 

transaction and involved self-dealing. 

570. The price paid to CEOC for transferring Total Rewards was far below the value of 

Total Rewards and was not entirely fair to CEOC. 

571. The process by which CEC initiated, structured, negotiated, and disclosed the 

transfer of Total Rewards to CES was not entirely fair to CEOC. CEOC was given no say in 

deciding whether to sell these assets, how the transaction was structured, or when and how it was 

disclosed. CEOC had no role in the negotiations of the transaction, and was not even represented 

in the negotiations. Instead, the entire process was dominated by CEC and the Sponsors. 

572. Although CEC formed a special committee of its board to structure and negotiate 

the price of the other transactions that happened at this same time, that Committee was never 

advised that CEC and CEOC could have divergent interests or that the CEC Special Committee 

would have a fiduciary duty or other obligation to protect CEOC or its creditors due to CEOC’s 

insolvency. The CEC Special Committee also never considered whether CEOC should retain 

control over Total Rewards, even though there would be evident long-term consequences to 

CEOC and its creditors if control of Total Rewards were transferred to entities CEC and the 

Sponsors controlled. 

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573. There was no fair process. CEOC had no independent directors, legal counsel, or 

financial advisors to review the transfer of Total Rewards. There was no marketing process for 

possible sale of Total Rewards, and no third parties were solicited to determine if they might 

have an interest in acquiring or licensing all or part of the Total Rewards intellectual property. 

CEOC also did not ask for or receive a fairness opinion. 

574. CEC breached its fiduciary duties to CEOC. 

575. The CEC Conflicted Directors and individual directors, who individually owed 

fiduciary duties to CEOC, breached those fiduciary duties. 

Breaches Of Fiduciary Duty By CEOC’s Directors 

576. CEOC’s board at the time the transfer of Total Rewards was approved consisted 

solely of Loveman and Hession. Both were conflicted. Loveman, of course, was CEC’s 

Chairman and Chief Executive Officer. Hession was CEC’s Chief Financial Officer. Both 

Loveman and Hession owned stock in CAC and, therefore, stood to benefit personally from the 

below-market price at which CEOC had transferred Total Rewards to CES. 

577. Loveman breached his fiduciary duties to CEOC by approving, authorizing, and 

facilitating a transaction that was not in the best interests of CEOC. 

578. Loveman also breached his fiduciary duties to CEOC by failing to ensure that 

CEOC received a fair price for these assets or that a fair process was followed. Loveman did not 

consider using a marketing process for the sale of these assets; made no effort to solicit any 

third-party bids, offers, or proposals; made no effort to convene or create a special committee of 

independent directors to review the transaction; did not ask for or receive an opinion about the 

fairness of the transaction to CEOC; did not retain independent lawyers or advisors to represent 

CEOC; and made no analysis of CEOC’s solvency. 

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579. The transfer of Total Rewards to CES was approved by the CEOC board as part 

of its approval of the 2014 Transaction Agreement. However, the CEOC board did not hold a 

meeting to discuss the transfer of Total Rewards, or even to discuss its approval of the 2014 

Transaction Agreement. Instead, CEOC’s two directors—Loveman and Hession—approved the 

transaction by signing a boilerplate written consent. In failing to reach an informed opinion, in 

ignoring basic principles of governance, and in voting to approve the 2014 Transaction 

Agreement while they had disqualifying conflicts of interest, Loveman breached his fiduciary 

duties to CEOC. 

Aiding & Abetting Breaches Of Fiduciary Duty 

580. The Conflicted Directors and individual directors, the Sponsors, and the 

Sponsors’ officers and agents knew that CEC, as CEOC’s controlling stockholder, and the 

boards of CEC and CEOC owed fiduciary duties to CEOC. The CEC Conflicted Directors and 

individual directors, the Sponsors, and the Sponsors’ officers and agents knew or should have 

known that CEC and the boards of CEC and CEOC breached those fiduciary duties by 

compelling CEOC to enter into transactions that were against CEOC’s interests, benefited CEC 

at CEOC’s expense, did not provide a fair price to CEOC, and did not result from a fair process. 

581. The Conflicted Directors and individual directors, the Sponsors, the Sponsors’ 

and officers and agents knowingly participated in those breaches of fiduciary duty in the 

following ways: 

a. by virtue of their power to appoint the entire board of CEC and the fact 

that a majority of the directors of CEC’s board were officers of Apollo and 

TPG, the Sponsors dominated and controlled the actions of CEC’s board 

and CEOC’s board; 

b. the CEC Conflicted Directors and individual directors, the Sponsors, and 

the Sponsors’ officers negotiated and implemented the transaction, even 

though it was not in CEOC’s best interests; 

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c. Apollo conceived, designed, and structured the transfer of Total Rewards 

to a bankruptcy-remote entity dominated by CERP and Growth Partners 

that would have complete control over Total Rewards; 

d. Apollo assisted in preparing the first drafts of the term sheets outlining the 

terms, conditions, values, and structures of the transfer of Total Rewards 

to CES, specifically including the methods of diluting CEOC’s ownership 

and control of Total Rewards to the benefit of CERP and Growth Partners; 

e. upon information and belief, TPG reviewed drafts of the term sheets and 

Services LLC Agreements and provided comments; 

f. although the Sponsors knew and intended that the transfer of CEOC’s 

intellectual property to CES would allow CEC and the Sponsors to 

maintain control of valuable CEOC assets, transfer those assets beyond the 

reach of CEOC’s creditors, and better position CEC and the Sponsors for 

CEOC’s restructuring or bankruptcy, they did not disclose these intentions 

to CEOC’s board; 

g. despite their knowledge that CEC and CEOC had divergent interests, the 

Sponsors exploited the conflicts of interest of CEOC board members who 

sat on CEC’s board or were officers of CEC or served as senior executives 

of CEC; 

h. the Sponsors formulated and decided upon the terms of the Services LLC 

Agreements that required CES to sublicense the CEOC intellectual 

property to CERP, Growth Partners, and other subsidiaries or affiliates of 

CEC, which resulted in CERP and Growth Partners obtaining the nearly 

unlimited right to use the Total Rewards program and related intellectual 

property for little or nothing; 

i. CEOC, CEC, the Sponsors, and the individual defendants understood that 

CEOC was insolvent on and after the date of each transfer, as evidenced 

by, inter alia, the analyses CEC and Sponsor had prepared or seen that 

indicated CEOC had a negative equity value and would be unable to repay 

its debts, and the decision to create bankruptcy remote entities to receive 

and hold valuable CEOC assets; 

j. despite their knowledge that CEC and CEOC had divergent interests, the 

Sponsors and CEC proposed, negotiated, structured, evaluated, and 

approved the transfer of CEOC’s intellectual property through a process 

that failed to involve or protect the interests of CEOC; 

k. the Sponsors knew that the value of the consideration received by CEOC 

was not reasonably equivalent to the value of the assets transferred; and 

l. the Sponsors intentionally structured the Services LLC Agreement to 

transfer effective control of Total Rewards to CERP and Growth Partners, 

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enriching them at CEOC’s direct expense and specifically provided that 

CEOC would lose governance rights in CES in the event of bankruptcy, 

that CEOC could not assign its interest in CES or withdraw from CES 

without the consent of CERP and Growth Partners, that the CEOC 

employees necessary to operate Total Rewards would be transferred to 

CES, that the know-how and tangible intellectual property necessary to 

operate and maintain Total Rewards would be transferred to CES, and that 

CES and its sublicensees would have control of derivative works created 

from CEOC’s intellectual property. 

582. The Conflicted Directors and individual directors, the Sponsors, Rowan, and 

Sambur are liable for aiding and abetting breaches of fiduciary duty in connection with the 

transfer of Total Rewards. 

583. CEOC has been injured by these breaches of fiduciary duties in an amount to be 

determined. 

Civil Conspiracy 

584. Starting in mid-2012, the Conflicted Directors agreed and conspired to commit 

unlawful acts, including to fraudulently transfer CEOC’s valuable assets, breach fiduciary duties 

owed to CEOC, engage CEOC in damaging financial transactions, and otherwise delay, hinder, 

and defraud CEOC and its creditors. Each of the conspirators intentionally participated in this 

scheme. The Transfer of Total Rewards constitutes an overt act taken in furtherance of the 

conspirators’ unlawful scheme. The conspirators’ actions in creating, structuring, negotiating, 

evaluating, and approving the transfers to CEOC’s intellectual property, as more fully detailed 

herein, constitute further overt acts taken in furtherance of their unlawful scheme. 

585. The Transfer of Total Rewards and other CEOC intellectual property, the 

conspirators’ overt acts in furtherance of that transfer, and the conspirators’ overall scheme and 

agreement to fraudulently transfer CEOC’s valuable assets, breach fiduciary duties owed to 

CEOC, engage CEOC in damaging financial transactions, and otherwise delay, hinder, and 

defraud CEOC and its creditors caused damages to CEOC in an amount to be determined. 

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CLAIM XIV 

TRANSFER OF CEOC’S PROPERTY MANAGEMENT BUSINESS 

(Nev. Rev. Stat. §§ 112.180, 112.190, 112.210; 6 Del. C. §§ 1304, 1305, 1307; and 

11 U.S.C. §§ 544, 548(a)(1)(A),(B), 550) 

(Fraudulent Transfer, Breach Of Fiduciary Duty, Aiding & Abetting 

Breach Of Fiduciary Duty, Civil Conspiracy)

CEC, CES, Sponsors, CEC Conflicted Directors, Loveman, Rowan, Sambur, Benjamin, 

Housenbold, Kleisner, Press, Swann and Williams 

586. Plaintiffs repeat and reallege paragraphs 1 through 585. 

Fraudulent Transfer 

587. At all relevant times, CEOC has been insolvent. 

588. The 2014 Transaction Agreement required CEOC to transfer its portfolio of 

property management agreements, its workforce and other enterprise services to the 

newly-formed Caesars Enterprise Services LLC. These agreements and enterprise services were 

of enormous value to CEOC. 

589. CEOC received no consideration in return for transferring the property 

management agreements to CES other than a 69% ownership stake in CES. However, CES was 

designed to be a flow-through entity that was intentionally structured to have no profits. 

590. The other owners of CES were CERP and Growth Partners. A three-person 

Steering Committee makes all major decisions for CES. Each of CEOC, CERP and Growth 

Partners has a seat on the Steering Committee. 

591. At all relevant times, CEC and the Sponsors owned, controlled, and dominated 

CERP and Growth Partners. 

592. Because of the governance structure of CES, CEOC had no control over the 

governance of CES. Instead, CERP and Growth Partners hold a majority of the votes. 

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593. The transfer of the property management agreements to CES was a constructive 

fraudulent transfer because CEOC received inadequate consideration and less than reasonably 

equivalent value for the property management agreements. 

594. In addition, the transfer of the property management agreements was an actual 

fraudulent transfer because the purpose and effect of the transfer was to hinder or delay CEOC’s 

creditors by placing critical and valuable assets beyond their reach. Evidence of fraudulent 

intent includes the facts that: 

a. the Sponsors, and Apollo in particular, conceived of the transaction; 

b. the transaction was designed and intended to allow CEC and the Sponsors 

to maintain control of CEOC’s portfolio of management agreements, 

transfer those agreements beyond the reach of CEOC’s creditors, and 

better position CEC and the Sponsors for CEOC’s restructuring or 

bankruptcy; 

c. CEOC, CEC, the Sponsors, and the individual defendants understood that 

CEOC was insolvent on and after the date of the transfer of the 

management agreements, as evidenced by, inter alia, the analyses CEC 

and Sponsor had prepared or seen that indicated CEOC had a negative 

equity value and would be unable to repay its debts, the creation of 

bankruptcy remote entities to receive and hold valuable CEOC assets, and 

the CEC Special Committee’s refusal to provide a representation that 

CEOC was solvent, as requested by the CAC Special Committee in 

connection with the transaction; 

d. despite their knowledge that CEC and CEOC had divergent interests, the 

Sponsors and CEC proposed, negotiated, structured, evaluated, and 

approved the transfer of CEOC’s portfolio of property management 

agreements through a process that failed to involve or protect CEOC’s 

interests; 

e. the transfer of the property management business was to a newly created, 

bankruptcy-remote shared services entity that is controlled by CEC and 

the Sponsors; 

f. CEC and the Sponsors retained control of the assets; 

g. the value of the consideration received by CEOC was not reasonably 

equivalent to the value of the assets transferred; and 

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h. the transfer substantially impaired CEOC’s future ability to service its 

debt. 

595. The transfer of CEOC’s property management business, including CEOC’s 

workforce and enterprise services, is avoidable and recoverable, and CEC and CES are liable for 

the constructive and actual fraudulent transfer of CEOC’s property management business. 

Breaches Of Fiduciary Duty By CEC And CEC’s Directors 

596. At all relevant times, CERP and Growth Partners were direct or indirect 

subsidiaries or affiliates of CEC. Thus, the transfer of CEOC’s property management 

agreements, workforce, and enterprise services to CES was a related party transaction and 

involved self-dealing. 

597. The price paid to CEOC for transferring its property management agreements, 

workforce and enterprise services was far below the value of those agreements and was not 

entirely fair to CEOC. 

598. The process by which CEC initiated, structured, negotiated and disclosed the 

transfer of Total Rewards to CES was not entirely fair to CEOC. CEOC was given no say in 

deciding whether to sell these assets, how the transaction was structured or when and how it was 

disclosed. CEOC had no role in the negotiations of the transaction, and was not even represented 

in the negotiations. Instead, the entire process was dominated by CEC and the Sponsors. 

599. Although CEC formed a Special Committee of its board to structure and negotiate 

the price of the other transactions that happened at this same time, that Committee was never 

advised that CEC and CEOC could have divergent interests or that the CEC Special Committee 

would have a fiduciary duty or other obligation to protect CEOC or its creditors due to CEOC’s 

insolvency. The CEC Special Committee also never considered whether CEOC should retain 

control over the property management agreements, workforce, and enterprise services, even 

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though there could be consequences to CEOC and its creditors if control of the property 

management agreements, workforce, and enterprise services was transferred to entities CEC and 

the Sponsors controlled, such as creating certain risks to formulating a plan of reorganization (in 

addition to structural issues that already existed) that would allow CEOC to emerge from chapter 

11 as a standalone entity. 

600. CEC breached its fiduciary duties to CEOC. 

601. The CEC Conflicted Directors and the individual directors, who individually 

owed fiduciary duties to CEOC, breached those fiduciary duties. 

Breaches Of Fiduciary Duty By CEOC’s Directors 

602. CEOC’s board at the time the transfer of the property management agreements 

was approved consisted solely of Loveman and Hession. Both were conflicted. Loveman was 

CEC’s Chairman and Chief Executive Officer and Hession was CEC’s Chief Financial Officer. 

Both Loveman and Hession owned stock in CAC and, therefore, stood to benefit personally from 

the below-market price at which CEOC had sold its portfolio of property management 

agreements to Growth Partners. 

603. Loveman breached his fiduciary duties to CEOC by approving, authorizing, and 

facilitating a transaction that was not in the best interests of CEOC. 

604. Loveman also breached his fiduciary duties to CEOC by failing to ensure that 

CEOC received a fair price for its portfolio of property management agreements or that a fair 

process was followed. Loveman did not consider using a marketing process for the sale of these 

assets; made no effort to solicit any third-party bids, offers, or proposals; made no effort to 

convene or create a special committee of independent directors to review the transaction; did not 

ask for or receive an opinion about the fairness of the transaction to CEOC; did not retain 

independent lawyers or advisors to represent CEOC; and made no analysis of CEOC’s solvency. 

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605. The transfer of the property management agreements, workforce, and enterprise 

services to CES was approved by the CEOC board as part of its approval of the 2014 Transaction 

Agreement. However, the CEOC board did not hold a meeting to discuss the transfer of the 

property management agreements, or even to discuss its approval of the 2014 Transaction 

Agreement. Instead, CEOC’s two directors—Loveman and Hession—approved the transaction 

by signing a boilerplate written consent. In failing to reach an informed opinion, in ignoring 

basic principles of governance, and in voting to approve the 2014 Transaction Agreement while 

they had disqualifying conflicts of interest, Loveman breached his fiduciary duties to CEOC. 

Aiding & Abetting Breaches Of Fiduciary Duty 

606. The Conflicted Directors and individual directors, the Sponsors, and the 

Sponsors’ officers and agents knew that CEC, as CEOC’s controlling stockholder, and the 

boards of CEC and CEOC owed fiduciary duties to CEOC. The CEC Conflicted Directors and 

individual directors, the Sponsors, and the Sponsors’ officers and agents knew or should have 

known that CEC and the boards of CEC and CEOC breached those fiduciary duties by 

compelling CEOC to enter into transactions that were against CEOC’s interests, benefited CEC 

at CEOC’s expense, did not provide a fair price to CEOC, and did not result from a fair process. 

607. The Conflicted Directors and individual directors, the Sponsors, and the 

Sponsors’ officers and agents knowingly participated in those breaches of fiduciary duty in the 

following ways: 

a. by virtue of their power to appoint the entire board of CEC and the fact 

that a majority of the directors of CEC’s board were officers of Apollo and 

TPG, the Sponsors dominated and controlled the actions of CEC’s board 

and CEOC’s board; 

b. the CEC Conflicted Directors, the Sponsors, and the Sponsors’ officers 

negotiated and implemented the transaction, even though it was not in 

CEOC’s best interests; 

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c. Apollo conceived, designed, and structured the transaction, including the 

selection of CEOC assets to be sold and the creation of new entities that 

would hold the properties for the benefit of CEC and the Sponsors; 

d. although the Sponsors understood that the transaction was designed to 

allow CEC and the Sponsors to maintain control of valuable CEOC assets, 

transfer those assets beyond the reach of CEOC’s creditors, and better 

position CEC and the Sponsors for CEOC’s restructuring or bankruptcy, 

they did not disclose these intentions to CEOC’s board; and 

e. despite their knowledge that CEC and CEOC had divergent interests, the 

Sponsors exploited the conflicts of interest of CEOC board members who 

sat on CEC’s board or were officers of CEC. 

608. CEOC has been injured by these breaches of fiduciary duties in an amount to be 

determined. 

609. The Conflicted Directors and individual directors and the Sponsors are liable for 

aiding and abetting breaches of fiduciary duty in connection with the transfer of CEOC’s 

property management business. 

Civil Conspiracy 

610. Starting in mid-2012, the Conflicted Directors agreed and conspired to commit 

unlawful acts, including to fraudulently transfer CEOC’s valuable assets, breach fiduciary duties 

owed to CEOC, engage CEOC in damaging financial transactions, and otherwise delay, hinder, 

and defraud CEOC and its creditors. Each of the conspirators intentionally participated in this 

scheme. The Transfer of CEOC’s Property Management Business constitutes an overt act taken 

in furtherance of the conspirators’ unlawful scheme. The conspirators’ actions in creating, 

structuring, negotiating, evaluating, and approving the transfer, as more fully detailed herein, 

constitute further overt acts taken in furtherance of their unlawful scheme. 

611. The Transfer of CEOC’s Property Management Business, the conspirators’ overt 

acts in furtherance of that transfer, and the conspirators’ overall scheme and agreement to 

fraudulently transfer CEOC’s valuable assets, breach fiduciary duties owed to CEOC, have 

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CEOC engage CEOC in damaging financial transactions, and otherwise delay, hinder, and 

defraud CEOC and its creditors caused damages to CEOC in an amount to be determined. 

CLAIM XV 

THE B-7 TRANSACTION 

(Nev. Rev. Stat. §§ 112.180, 112.190, 112.210; 6 Del. C. §§ 1304, 1305, 1307; and 

11 U.S.C. §§ 544, 548(a)(1)(A),(B), 550) 

(Waste of Corporate Assets, Fraudulent Transfer, Breach Of Fiduciary 

Duty, Aiding & Abetting Breach Of Fiduciary Duty, Civil Conspiracy)

CEC, Growth Partners, Sponsors, CEC Conflicted Directors, 

Loveman, Rowan, Sambur, Chatham, Benjamin, Kleisner, Press, Swann and Williams 

612. Plaintiffs repeat and reallege paragraphs 1 through 611. 

Fraudulent Transfer 

613. At all relevant times, CEOC has been insolvent. 

614. Throughout the relevant period, CEC, the directors of CEC, and the Sponsors 

completely dominated and controlled CEOC and all of CEOC’s subsidiaries and affiliates. 

615. On May 5, 2014, CEOC announced a transaction (the “B-7 Transaction”) 

pursuant to which it borrowed $1.75 billion from a syndicate of banks, repaid certain bank debt, 

and agreed to take steps to retire bond debt that was due to mature in 2015. Ostensibly, the B-7 

Transaction was undertaken to improve CEOC’s liquidity, extend the maturities of its funded 

debt, and provide CEOC with a “runway” to recovering from its insolvency. In fact, the B-7 

Transaction was intended to serve the objectives of CEC and the Sponsors. 

616. In each case, the payments CEOC made were constructive fraudulent transfers 

because CEOC received inadequate consideration and less than reasonably equivalent value for 

the payments. Among other things, CEOC paid over $400 million to Chatham, $452 million to 

Growth Partners, and $129 million in fees to GSO and BlackRock in conjunction with the B-7 

Transaction. 

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617. In addition, certain payments CEOC made were actual fraudulent transfers 

because the purpose and effect of the transfer was to hinder or delay CEOC’s creditors by 

placing critical and valuable assets beyond their reach. Evidence of fraudulent intent includes 

the facts that: 

a. the Sponsors, and Apollo in particular, conceived the transaction; 

b. the transaction was motivated principally by the desire of CEC and the 

Sponsors’ desire to modify CEC’s Bank Guarantee, to attempt to remove 

CEC’s Bond Guarantees, funnel cash from CEOC to Growth Partners, and 

avoid receiving a qualified report from its independent accountants about 

‘EC’s viability as a going concern; 

c. CEOC, CEC, the Sponsors, the 2014 Transferees, and the individual 

defendants understood that CEOC was insolvent at all times during the 

development and closing of the transaction; 

d. despite their knowledge that CEC and CEOC had divergent interests, the 

Sponsors and CEC proposed, negotiated, structured, evaluated, and 

approved the B-7 transaction through a process that failed to involve or 

protect CEOC’s interests; 

e. the CEOC board did not meaningfully consider the transaction and instead 

approved the transaction through written consent; 

f. CEOC redeemed the 2015 Notes at a premium and with interest, despite 

the fact that the Notes were selling at a substantial discount in the 

marketplace; 

g. the redemption of the 2015 Notes at a premium and with interest was 

contrary to the past practice of CEC and Apollo of negotiating the best 

price when it repurchased CEOC’s distressed debt; 

h. only eight months before, the 2015 Notes had previously been valued at 

substantial discount from their face value in connection with the creation 

and capitalization of CAC; 

i. $452 million of the $1.75 billion raised through the B-7 Transaction was 

paid to redeem, at a premium and with interest, notes held by Growth 

Partners; 

j. over $400 million of $1.75 billion raised through the B-7 Transaction was 

paid to redeem, at a premium and with interest, notes held by Chatham, 

which contemporaneously agreed to purchase worthless CEOC stock to 

assist in CEC’s efforts to remove the Bond Guarantees; 

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k. but for the repurchase of the notes through the B-7 Transaction, the notes 

would have declined in value following the announcement of the release 

of the Bond Guarantees; 

l. CEC and the Sponsors arranged for CEOC to redeem 2015 Notes held by 

Growth Partners and Chatham, causing CEOC to enter into stand-alone 

note purchase agreements with Growth Partners and Chatham; 

m. Growth Partners knew it was receiving a premium on the notes from an 

entity (CEOC) controlled by its largest shareholders; 

n. although Growth Partners had agreed to serve as a lender to the B-7 

Transaction on a dollar-for-dollar basis for each dollar of notes 

repurchased by CEOC, no part of the $1.75 billion provided through the 

B-7 term loan came from Growth Partners; 

o. CEOC incurred $219.1 million of fees and expenses in connection with 

the B-7 Transaction, almost all of which was unnecessary; 

p. Nearly $129 million of those fees was paid to GSO and BlackRock for a 

backstop financing facility, which was taken solely to benefit CEC in its 

efforts to amend the First Lien Credit Agreement to change the terms of 

CEC’s Bank Guarantee from a guarantee of payment to a guarantee of 

collection; 

q. over $795 million of the $1.75 billion raised through the B-7 Transaction 

was used to roll over existing B-1, B-3, B-4, B-5, and B-6 terms loans, 

only $29.1 million of which was due within the next year; 

r. the interest rate on the new B-7 term loan was materially higher than the 

interest rate on the existing B-1, B-3, B-4, B-5, and B-6 terms loans; 

s. the B-7 Transaction did not actually provide CEOC with any additional 

liquidity, but instead required CEOC to spend $315 million of its own 

cash as part of the transaction; and 

t. at the same time the Sponsors and CEC were representing that the purpose 

of the B-7 Transaction was to provide liquidity to CEOC and extend its 

runway, they were demanding that CEOC pay CEC the outstanding 

amounts on the Intercompany Revolver. 

618. The payments and transfers made in connection with the B-7 Transaction are 

avoidable and recoverable, and CEC, Growth Partners, and Chatham are liable for constructive 

and actual fraudulent transfers in connection with the B-7 Transaction. 

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Breaches Of Fiduciary Duty By CEC And CEC’s Directors 

619. At all relevant times, Growth Partners was an indirect subsidiary and affiliate of 

CEC. Thus, the payments CEC required CEOC to make in the B-7 Transaction were payments 

to third parties for the benefit of CEC and therefore were self-dealing transactions. 

620. In addition, the B-7 Transaction was a waste of corporate assets because it 

required CEOC to borrow $1.75 billion and spend $315 million of its scarce cash to refinance 

bank loans, redeem notes, and pay commitment fees that did not benefit CEOC and instead were 

intended to benefit CEC. The amounts CEOC paid to third parties in the course of the B-7 

Transaction far exceeded any benefit CEOC received. 

621. In addition, CEC knew that the additional debt and additional exhaustions of 

CEOC’s cash reserves would make it even more difficult for CEOC to pay its debts and would 

hasten CEOC’s bankruptcy. 

622. The process by which CEC initiated, structured, negotiated and disclosed the B-7 

Transaction was not entirely fair to CEOC. CEOC was given no say in deciding whether to 

engage in the transaction, whether it needed the backstop financing from GSO and BlackRock, 

how the transaction should be structured, what bank loans were to be repaid, and whether and at 

what price the 2015 Notes would be redeemed. CEOC had no role in the negotiation of the 

transaction, and was not even represented in the negotiations. Instead, the entire process was 

dominated by CEC and the Sponsors. 

623. Notwithstanding the fact that the B-7 Transaction required CEOC to increase the 

overall amount of its indebtedness, materially increase the interest rate it paid on its first lien 

bank debt, and spend $315 million of its scarce cash, CEOC failed to adhere to even the most 

rudimentary processes. CEOC had no independent directors or financial advisors to review the 

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B-7 Transaction. Its legal counsel, Paul Weiss, was the same law firm representing CEC, which 

had conflicting interests. 

624. CEC breached its fiduciary duties to CEOC. 

625. The CEC Conflicted Directors and individual directors, who individually owed 

fiduciary duties to CEOC, breached those fiduciary duties. 

Breaches Of Fiduciary Duty By CEOC’s Directors 

626. At the time of the B-7 Transaction, CEOC’s board consisted of Loveman and 

Hession. Neither was independent and both had interests adverse to CEOC’s. Loveman was 

CEC’s Chairman and Chief Executive Officer, Hession was CEC’s Chief Financial Officer, and 

both Loveman and Hession owned stock in CAC, which benefited from CEOC’s redemption of 

Growth Partners’ 2015 Notes. 

627. The CEOC board gave the transaction no meaningful review. It held no 

face-to-face meeting but instead approved the transaction in a standard written consent. In 

failing to reach an informed opinion, in ignoring basic principles of governance, and in voting to 

approve the B-7 Transaction while they had disqualifying conflicts of interest, Loveman 

breached his fiduciary duties to CEOC. 

Aiding & Abetting Breach Of Fiduciary Duty 

628. The CEC Conflicted Directors and individual directors, the Sponsors, and the 

Sponsors’ officers and agents knew that CEC, as CEOC’s controlling stockholder, and the 

boards of CEC and CEOC owed fiduciary duties to CEOC. The CEC Conflicted Directors, the 

Sponsors, and the Sponsors’ officers and agents knew or should have known that CEC and the 

boards of CEC and CEOC breached those fiduciary duties by compelling CEOC to enter into 

transactions that were against CEOC’s interests, benefited CEC at CEOC’s expense, did not 

provide a fair price to CEOC, and did not result from a fair process. 

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629. The CEC Conflicted Directors, the Sponsors, and the Sponsors’ officers and 

agents knowingly participated in those breaches of fiduciary duty in the following ways: 

a. by virtue of their power to appoint the entire board of CEC and the fact 

that a majority of the directors of CEC’s board were officers of Apollo and 

TPG, the Sponsors dominated and controlled the actions of CEC’s board 

and CEOC’s board; 

b. the CEC Conflicted Directors, the Sponsors, and the Sponsors’ officers 

negotiated and implemented the transaction, even though it was not in 

CEOC’s best interests; 

c. Apollo conceived, designed, and structured the B-7 Transaction, including 

the details of the amendment of CEOC’s bank loans, the modification of 

CEC’s Bank Guarantee, the redemption of the 2015 Notes, and the timing, 

structure, pricing and implementation of the transaction; 

d. Apollo decided to redeem the 2015 Notes at a premium, despite the fact 

that the notes were selling at a substantial discount in the marketplace; 

e. Apollo determined or agreed to the fees associated with the B-7 

Transaction; 

f. Apollo arranged for CEC to sell 5% of the equity of CEOC to Scoggin, 

Chatham, and Paulson, which Apollo claimed was a necessary condition 

to close the B-7 Transaction; 

g. Apollo made a side deal with Chatham under which the Sponsors would 

cause CEOC to redeem Chatham’s 2015 Notes at par plus a premium in 

exchange for Chatham’s agreement to assist the Sponsors and CEC in 

their efforts to release the Bond Guarantees by purchasing worthless 

CEOC stock; 

h. Apollo utilized the B-7 Transaction to justify its intentions and actions in 

attempting to release the Bond Guarantees, contending that the B-7 

lenders had insisted on a release of the Bond Guarantees as a condition of 

the financing; 

i. although the Sponsors believed that the B-7 transaction would result in a 

release of the Bond Guarantees and planned to have CEOC redeem the 

notes held by Growth Partners at a substantial premium, they failed to 

implement procedures to ensure that the process used to approve the 

transaction was entirely fair to CEOC; and 

j. despite their knowledge that CEC and CEOC had divergent interests, the 

Sponsors exploited the conflicts of interest of CEOC board members who 

sat on CEC’s board or were officers of CEC. 

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630. The Conflicted Directors and individual directors and the Sponsors are liable for 

aiding and abetting breaches of fiduciary duty in connection with the B-7 Transaction. 

Civil Conspiracy 

631. Starting in mid-2012, the Conflicted Directors agreed and conspired to commit 

unlawful acts, including to fraudulently transfer CEOC’s valuable assets, breach fiduciary duties 

owed to CEOC, engage CEOC in damaging financial transactions, and otherwise delay, hinder, 

and defraud CEOC and its creditors. Each of the conspirators intentionally participated in this 

scheme. The B-7 Transaction constitutes an overt act taken in furtherance of the conspirators’ 

unlawful scheme. The conspirators’ actions in creating, structuring, negotiating, evaluating, and 

approving the transaction, as more fully detailed herein, constitute further overt acts taken in 

furtherance of their unlawful scheme. 

632. With respect to the B-7 Transaction and the release of the CEC Bond Guarantees, 

the conspirators also agreed and conspired among themselves and with others to devise and 

implement a set of interrelated financial transactions that served to damage CEOC and hinder, 

delay, and defraud creditors. As part of the scheme, the Sponsors agreed to cause CEOC to 

redeem Chatham’s 2015 Notes at par plus a premium in connection with the B-7 Transaction in 

exchange for its agreement to assist the Sponsors in releasing the Bond Guarantees by 

purchasing worthless CEOC stock. 

633. The B-7 Transaction, the conspirators’ overt acts in furtherance of that 

transaction, and the conspirators’ overall scheme and agreement to fraudulently transfer CEOC’s 

valuable assets, breach fiduciary duties owed to CEOC, engage CEOC in damaging financial 

transactions, and otherwise delay, hinder, and defraud CEOC and its creditors caused damages to 

CEOC in an amount to be determined. 

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CLAIM XVI 

PURPORTED RELEASE OF CEC’S BOND GUARANTEES 

(Waste of Corporate Assets, Breach Of Fiduciary Duty, Aiding & 

Abetting Breach Of Fiduciary Duty, Civil Conspiracy) 

CEC, Sponsors, CEC Conflicted Directors, Loveman, Rowan, Sambur 

634. Plaintiffs repeat and reallege paragraphs 1 through 633. 

Breaches Of Fiduciary Duty By CEC And CEC’s Directors 

635. At all relevant times, CEOC was insolvent and CEC, as CEOC’s controlling 

stockholder, and CEC’s Directors, through their domination of CEOC’s board, owed fiduciary 

duties to CEOC. 

636. On May 5, 2014, CEC sold 5% of the equity in CEOC to Scoggin, Chatham, and 

Paulson in privately negotiated transactions. CEC received a total of $6.15 million. That same 

day, CEC announced that the sale of CEOC stock had served to release CEC from its Bond 

Guarantees. On June 2, 2014, CEC caused CEOC’s CFO Donald Colvin to deliver to the 

indenture trustee for the 2009 bond indenture a certificate stating that CEOC “elects to 

automatically release the Parent Guarantee pursuant to the last paragraph of Section 12.02(c) of 

the 2009 Indenture.” On information and belief, similar certificates were delivered to the 

indenture trustees for the other indentures governing the Second Priority Notes. 

637. The transactions that CEC used to purportedly release its Bond Guarantees were 

self-dealing transactions and were not entirely fair to CEOC. 

638. Among other things, the Bond Guarantees served to disincentivize CEC from 

stripping CEOC of assets, since the guarantees kept CEC on the hook for the repayment of 

CEOC’s debts. In addition, certain of the methods for removal of the Bond Guarantees required 

consent from CEOC. Accordingly, the Bond Guarantees and CEOC’s purported right to elect to 

release the Bond Guarantees had substantial value to CEC, as evidenced by the fact that CEC’s 

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stock price rose materially after the announcement that the Bond Guarantees had been 

purportedly released, while the value of CEOC’s notes plummeted. Despite the substantial value 

of the Bond Guarantees to CEC, CEOC received no benefit and no consideration in return for 

delivering these certificates and purportedly releasing its legal rights. 

639. The process by which CEC initiated, structured, negotiated and disclosed the 

purported release of the Bond Guarantees was not entirely fair to CEOC. CEOC was given no 

say in deciding whether to engage in the transaction and whether and to what extent it should 

receive consideration “electing” to release the Bond Guarantees. CEOC had no role in the 

negotiations of the transaction, and was not even represented in the negotiations. Instead, the 

entire process was dominated by CEC and the Sponsors. CEOC had no independent directors or 

financial advisors to review the purported release of the Bond Guarantees. 

640. CEC breached its fiduciary duties to CEOC. 

641. The CEC Conflicted Directors, who individually owed fiduciary duties to CEOC, 

breached those fiduciary duties. 

Breaches Of Fiduciary Duty By CEOC’s Directors 

642. At the time that CEC purportedly was released from the Bond Guarantees, 

CEOC’s board consisted of Loveman and Hession. Neither was independent and both had 

interests adverse to CEOC’s. Loveman was CEC’s Chairman and Chief Executive Officer, 

Hession was CEC’s Chief Financial Officer, and both Loveman and Hession owned stock in 

CAC, which benefited from the purported release of the Bond Guarantees. 

643. The CEOC board gave no meaningful review to the purported release of CEC’s 

Bond Guarantee. 

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Aiding & Abetting Breach Of Fiduciary Duty 

644. The CEC Conflicted Directors, the Sponsors, and the Sponsors’ officers and 

agents knew that CEC, as CEOC’s controlling stockholder, and the boards of CEC and CEOC 

owed fiduciary duties to CEOC. The CEC Conflicted Directors, the Sponsors, and the Sponsors’ 

officers and agents knew or should have known that CEC and the boards of CEC and CEOC 

breached those fiduciary duties by compelling CEOC to enter into transactions that were against 

CEOC’s interests, benefited CEC at CEOC’s expense, did not provide a fair price to CEOC, and 

did not result from a fair process. 

645. The CEC Conflicted Directors, the Sponsors, and the Sponsors’ officers and 

agents knowingly participated in those breaches of fiduciary in the following ways: 

k. the CEC Conflicted Directors, the Sponsors, and the Sponsors’ officers 

and agents negotiated and implemented the transaction purportedly 

releasing the Bond Guarantees for no consideration, even though it was 

not in CEOC’s best interests; 

l. Apollo formulated, planned and implemented the steps taken purportedly 

to release the Bond Guarantees; 

m. Apollo arranged the sale of CEOC’s stock to Scoggin, Chatham, and 

Paulson; 

n. Apollo made a side deal with Chatham under which the Sponsors would 

cause CEOC to redeem Chatham’s 2015 Notes at a premium in connection 

with the B-7 Transaction in exchange for Chatham’s agreement to assist 

the Sponsors in their efforts to release the Bond Guarantees by purchasing 

worthless CEOC stock; 

o. although the Sponsors understood that the transaction would result in a 

release of an asset of CEOC, they failed to implement procedures to 

ensure that the process used to approve the transaction was entirely fair to 

CEOC; and 

p. despite their knowledge that CEC and CEOC had divergent interests, the 

Sponsors exploited the conflicts of interest of CEOC board members who 

sat on CEC’s board or were officers of CEC. 

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646. The CEC Conflicted Directors, the Sponsors, and the Sponsors’ officers are liable 

for aiding and abetting breaches of fiduciary duty in connection with the purported release of the 

Bond Guarantees. 

Civil Conspiracy 

647. Starting in mid-2012, the Conflicted Directors agreed and conspired to commit 

unlawful acts, including to breach fiduciary duties owed to CEOC, and engage CEOC in 

damaging financial transactions. Each of the conspirators intentionally participated in this 

scheme. The purported release of the Bond Guarantees constitutes an overt act taken in 

furtherance of the conspirators’ unlawful scheme. The conspirators’ actions in creating, 

structuring, negotiating, evaluating, and approving the purported release of the Bond Guarantees, 

as more fully detailed herein, constitute further overt acts taken in furtherance of their unlawful 

scheme. 

648. With respect to the B-7 Transaction and the purported release of the Bond 

Guarantees, the conspirators also agreed and conspired among themselves and with others to 

devise and implement a set of interrelated financial transactions that served to damage CEOC 

and its creditors. As part of the scheme, the Sponsors agreed to cause CEOC to redeem 

Chatham’s 2015 Notes at par plus a premium in connection with the B-7 Transaction in 

exchange for its agreement to assist the Sponsors in releasing the Bond Guarantees by 

purchasing worthless CEOC stock. 

649. The purported release of the Bond Guarantees, the conspirators’ overt acts in 

furtherance of that transaction, and the conspirators’ overall scheme and agreement to breach 

fiduciary duties owed to CEOC, and engage CEOC in damaging financial transactions, caused 

damages to CEOC in an amount to be determined. 

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CLAIM XVII 

REPAYMENT OF INTERCOMPANY REVOLVER 

(11 U.S.C. §§ 544, 547, 548(a)(1)(A),(B), 550), 

Nev. Rev. Stat. §§ 112.180, 112.190, 112.210, 6 Del. C. §§ 1304, 1305, 1307) 

(Preference, Fraudulent Transfer)

CEC 

650. Plaintiffs repeat and reallege paragraphs 1 through 649. 

Preference 

651. From 2008 onwards, CEC and CEOC had agreed upon an unsecured credit 

facility (“the Intercompany Revolver”) pursuant to which CEOC could borrow money from 

CEC. By the fourth quarter of 2012, CEOC had borrowed $644.2 million under the 

Intercompany Revolver. 

652. Throughout the relevant period, CEOC was entirely or almost entirely owned by 

CEC, and CEC controlled and dominated CEOC. CEC thus was an insider with respect to 

CEOC. 

653. CEOC voluntarily filed for bankruptcy on January 15, 2015, and was the subject 

of an involuntary petition filed on January 12, 2015. Under either petition date, in the twelve 

months preceding CEOC’s bankruptcy filing, CEOC repaid $289 million under the 

Intercompany Revolver. 

Fraudulent Transfer 

654. In the four years preceding CEOC’s bankruptcy filing, CEOC paid CEC 

$662.5 million, including interest, with respect to the Intercompany Revolver. 

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655. These payments to CEC were actual fraudulent transfers because the purpose and 

effect of the transfer was to hinder or delay CEOC’s creditors by placing critical and valuable 

assets beyond their reach. Evidence of fraudulent intent includes the facts that: 

a. the transfers were to CEC; 

b. the shareholders of CEC retained control of the property after the 

transfers; 

c. CEOC was insolvent on and after the date of each transfer; 

d. the repayments were made before the maturity date and there was no 

independent process at CEOC to decide whether it was appropriate to do 

so; 

e. the repayments were made beginning in 2012 around the time that the 

terms of the Intercompany Revolver were changed so that CEC would no 

longer be required to re-lend the money, and it never did so despite 

CEOC’s liquidity needs and the fact that the interest rate on the 

Intercompany Revolver was lower than on CEOC’s other available credit; 

f. CEOC’s liquidity needs were one of the purported rationales for the 

creation of Growth and sale of the Planet Hollywood and Baltimore 

casinos, but that liquidity could have been secured by not prepaying the 

Intercompany Revolver, thereby preserving the ongoing EBITDA from 

these properties to pay creditors; and 

g. there was no legitimate purpose for the June 2014 repayment. 

656. Although the Intercompany Revolver was an agreement between CEC and 

CEOC, officers of the Sponsors took an active role in monitoring CEOC’s use of the 

Intercompany Revolver and undertook years before CEOC entered bankruptcy to have CEOC 

repay the loan. In fact, one reason CEC and the Sponsors forced CEOC to sell assets in 2013 

and 2014 and to engage in the B-7 Transaction was to raise money to repay the Intercompany 

Revolver. 

657. The payments of the Intercompany Revolver are avoidable and recoverable, and 

CEC is liable for the constructive and actual fraudulent transfers resulting of the payments made 

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under the Intercompany Revolver during the four year period preceding the petition date of 

CEOC’s bankruptcy case. 

CLAIM XVIII 

REDEMPTION OF PIK NOTES 

(Waste of Corporate Assets, Breach Of Fiduciary Duty)

CEC, Davis, Loveman, Rowan 

658. Plaintiffs repeat and reallege paragraphs 1 through 657. 

659. On October 2, 2014, the Executive Committee of CEOC’s board voted to redeem 

CEOC’s so-called PIK Notes at 103.583% of par. The notes were not due to mature until 2018 

and were trading at a substantial discount to their face amount. 

660. CEC was a holder of $4.3 million in face amount of PIK Notes and had other 

reasons to have the notes redeemed. Therefore, redemption of the notes was a self-dealing 

transaction. 

661. Although CEOC had, by then, two outside directors on its board and had 

constituted the Special Governance Committee to address self-dealing transactions, the two 

outside directors and the SGC were not consulted about the decision to have CEOC redeem the 

notes. Instead, the decision was made by Rowan, Davis and Loveman, each of whom was a 

director of CEC. Loveman also was CEC’s board chairman and CEO. 

662. Redemption of the notes was not in CEOC’s interest and it was running out of 

cash. 

663. The purpose of having CEOC redeem the PIK notes was to protect CEC from 

claims that its guarantee of CEOC’s bank debt would revert to a guarantee of payment, instead of 

a guarantee of collection, in the event the PIK notes went into default. To protect CEC, Rowan, 

Davis and Loveman decided to have CEOC redeem the notes. 

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664. Redemption of the notes was a windfall to investors. By some calculations, the 

notes were redeemed at a premium of 627% to their market price. 

665. CEC itself received $4.7 million for the PIK notes that it held. 

666. Having CEOC redeem the PIK notes at a premium to their market price was a 

waste of corporate assets, especially in view of the fact that the notes were not due until 2018 

and it was public knowledge that CEOC soon would be entering bankruptcy. 

667. In addition, it was a breach of fiduciary duty for Rowan, Davis and Loveman to 

have CEOC redeem the PIK notes because the redemption was not in CEOC’s interest. 

668. In addition, the transaction was not fair to CEOC. The price of the transaction 

was not fair because CEOC paid far more for the notes than they were worth. The process was 

unfair because Rowan, Davis and Loveman deliberately circumvented the by-laws of the CEOC 

board governing self-dealing transactions and reached their decision in an arbitrary manner. 

669. CEOC has been injured in an amount to be determined. 

CLAIM XIX 

COSTS OF TOTAL REWARDS CREDITS 

(Unjust Enrichment)

CEC, CERP, CAC, Growth Partners 

670. Plaintiffs repeat and reallege paragraphs 1 through 669. 

671. As described above, CEOC has been injured by CEC’s requirement that it use an 

unfair method to allocate costs when a customer redeems Total Rewards credits. Requiring that 

CEOC shoulder the cost of the credits, while receiving little of the benefit of those credits, serves 

as a de facto subsidy from CEOC to CEC, CERP, CAC, and Growth Partners. 

672. CEC, CERP, CAC, and Growth Partners have been unjustly enriched at CEOC’s 

expense as a result of this de facto subsidy. 

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673. CEC, CERP, CAC, and Growth partners should be ordered pay the cost of the 

Total Rewards credits redeemed at their properties. 

CLAIM XX 

ALLOCATION OF CEC COSTS 

(Unjust Enrichment)

CEC, CERP, CAC, Growth Partners, CES 

674. Plaintiffs repeat and reallege paragraphs 1 through 673. 

675. As described above, subsequent to the closing of the Four Properties Transaction, 

CEOC has paid more than its fair share of CES’ costs. The failure to update the cost allocation 

methodology to align with the properties’ share of revenues has resulted in another de facto 

subsidy from CEOC to CEC, CERP, CAC, Growth Partners, and CES. 

676. CEC, CERP, CAC, Growth Partners, and CES have been unjustly enriched at 

CEOC’s expense as a result of this de facto subsidy. 

677. CEC, CERP, CAC, and Growth Partners should be ordered pay their fair share of 

CES’ costs, consistent with the properties’ share of revenues, and/or CES should return to CEOC 

the extent to which CEOC has been overcharged for its share of CES’ costs. 

CLAIM XXI 

BREACH OF CONTRACT 

CEC 

678. Plaintiffs repeat and reallege paragraphs 1 through 677. 

679. In August 2014, CEOC and CEC entered into a Recovery Agreement in 

connection with a transaction involving certain noteholders. Under the Recovery Agreement, 

CEC agreed that “[i]f there is not a comprehensive out of court restructuring of the Company’s 

debt securities, or a prepackaged or prearranged in-court restructuring with requisite voting 

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support from each of the first and second lien secured creditor classes, within 18 months of the 

Effective Date of the Notes Purchase Agreement, then CEC will pay to CEOC the Recoverable 

Amount.” The Recoverable Amount is $35 million. 

680. In February 2016, the Recoverable Amount became due. On February 18, 2016, 

CEOC demanded the payment of the Recoverable Amount of $35 million because it was now 

due and payable. CEOC requested that CEC “remit the payment as soon as possible.” To date, 

CEC has not paid it. 

681. CEOC is entitled to payment in full of $35 million (the Recoverable Amount) in 

addition to interest at the highest legal rate. 

* * * 

WHEREFORE, Plaintiffs request a jury trial on all claims triable by a jury, pray that the 

Court enter judgment on each of Plaintiffs’ claims in favor of Plaintiffs, and against each of the 

Defendants jointly and severally, and further enter an order: 

(a) Awarding money damages to Plaintiffs against the Sponsors, CEC, CIE, 

CAC, Growth Partners, CERP, CES, the transferees of fraudulent transfers, individual 

defendants, and others in an amount to be determined for fraudulent transfer, breach of 

fiduciary duty, usurpation of corporate opportunity, waste of corporate assets, aiding and 

abetting breaches of fiduciary duty, civil conspiracy, unjust enrichment, and other causes; 

(b) Avoiding the following transfers (collectively, the “Contested Transfers”) 

and ordering that all documents, consents, and actions relating to them are rescinded and 

of no force and effect: 

(1) Transfer of Caesars’ online gaming business to the 2009 

Transferees (2009); 

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(2) Transfer of CMBS IP to CEC and the CMBS PropCos (2010); 

(3) Granting of easements on undeveloped Las Vegas land to the 

Easement Transferees (2011); 

(4) WSOP Transaction to the WSOP Transaction Transferees (2011); 

(5) Transfer of Linq And Octavius to CERP to the Linq/Octavius 

Transferees (2013); 

(6) Transfer Of Planet Hollywood and Horseshoe Baltimore Casino to 

the 2013 Transferees (2013); 

(7) Transfer of Bally’s Las Vegas, The Cromwell, Harrah’s 

New Orleans and The Quad to the 2014 Transferees (2014); 

(8) Transfer of undeveloped Las Vegas real estate to the 2014 

Transferees (2014); 

(9) Transfer of Total Rewards to the Total Rewards Transferees 

(2014); 

(10) Transfer of CEOC’s property management business to CEC and 

CES (2014); 

(11) Transfer of rights to CEOC’s intellectual property, tangible 

property and services pursuant to 2013 and 2014 Transaction 

Agreements, the Services LLC Agreements, and the Management 

Services Agreement to the CMBS PropCos and Services 

Transferees (2010, 2013, 2014); 

(12) Transfer of money and proceeds of the B-7 Transaction to CEC, 

Growth Partners, and Chatham; and 

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(13) Transfer of CEOC’s rights to release the Bond Guarantees to CEC. 

(c) Enjoining CEC, CAC and Growth Partners to, or to cause those of their 

affiliates that were the ultimate recipients of the assets transferred in the Contested 

Transfers to return such assets to the original transferor, free and clear of all liens and 

other encumbrances, such that each of the transferred assets shall be recovered, owned 

and controlled by CEOC and its affiliates; 

(d) In the event avoidance or rescission of the Contested Transfers, or any of 

them, is not practicable, award Plaintiffs monetary damages in an amount sufficient to 

compensate Plaintiffs for the loss of the transferred assets in an amount equal, as to each 

asset transfer, to the greater of: (i) the value of each such asset transferred as of the date 

of entry of judgment, or (ii) the value of each such asset transferred as of the date of such 

transfer; 

(e) Enjoining CEC to return to Plaintiffs all amounts Plaintiffs paid to CEC 

since January 1, 2009 to the filing of CEOC’s bankruptcy petition, including all amounts 

Plaintiffs paid to CEC under the Intercompany Revolver in that period; 

(f) Awarding Plaintiffs money damages as follows: 

(1) against CEC for CEC’s failure to remit to Plaintiffs no less than 

$55.8 million in tax refunds owing to Plaintiffs but wrongfully 

kept by CEC; 

(2) against the CEC Group for the CEC Groups use of CEOC’s NOLs; 

(3) against CEC for its failure to pay interest upon the intercompany 

loan CEOC made to CEC from 2009 onwards; 

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(4) against CEC, CES, CERP, CAC, and Growth Partners for the 

allocation to CEOC of an excessive and improper share of the 

expenses of CES; 

(5) against CEC, Growth Partners, CERP, and CES for the shifting to 

Plaintiffs the cost of redeeming Total Rewards credits in properties 

owned or operated by those defendants; 

(6) against CEC for the injury Plaintiffs suffered as a result of the B-7 

Transaction, including without limitation the cost of fees paid to 

GSO and Blackrock; the added interest expense of the B-7 loans; 

and the cost of redeeming the 2015 Notes; 

(7) against CEC, Davis, Loveman, and Rowan for the injury CEC 

suffered as a result of the redemption of the PIK notes; 

(8) against CEC for the release of the Bond Guarantees; and 

(9) against Chatham Asset Management for excessive amounts paid to 

Chatham in connection with the redemption of the 2015 Notes; and 

(10) against all defendants for their breaches of fiduciary duties, aiding 

and abetting breaches of fiduciary duty, conspiratorial acts, and 

other wrongdoing, as set forth in this Complaint. 

(g) Awarding money damages to Plaintiffs in the amount of all profits 

realized by or accruing to defendants, and any of their affiliates, from the Contested 

Transfers during the period of time from the respective dates of each of the Contested 

Transfers through and include the date of entry of judgment; 

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(h) Imposing a constructive trust and/or equitable lien on the assets transferred 

in the Contested Transfers; 

(i) Awarding Plaintiffs punitive damages with respect to all breaches of 

fiduciary duties and other intentional torts; 

(j) Awarding Plaintiffs $35 million plus interest at the highest lawful rate for 

Plaintiffs’ breach of contract claim; 

(k) Awarding Plaintiffs the costs of this action, including attorneys’ fees, 

together with pre- and post-judgment interest; and 

(l) Awarding Plaintiffs such other relief as the Court deems just and proper. 

Dated: August 9, 2016 /s/ David J. Zott, P.C. 

Chicago, Illinois James H.M. Sprayregen, P.C. 

 David R. Seligman, P.C. 

David J. Zott, P.C. 

Jeffrey J. Zeiger, P.C. 

KIRKLAND & ELLIS LLP 

KIRKLAND & ELLIS INTERNATIONAL LLP 

 300 North LaSalle 

 Chicago, Illinois 60654 

 Telephone: (312) 862-2000 

 Facsimile: (312) 862-2200 

- and - 

 Paul M. Basta, P.C. 

Nicole L. Greenblatt, P.C. 

KIRKLAND & ELLIS LLP 

KIRKLAND & ELLIS INTERNATIONAL LLP 

 601 Lexington Avenue 

 New York, New York 10022-4611 

 Telephone: (212) 446-4800 

 Facsimile: (212) 446-4900 

 

Counsel to the Debtors and Debtors in Possession 

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