A judge has now rejected an odd attempt by the junior bondholders of Caesars Entertainment’s bankrupt operating unit to disqualify the law firm Kirkland & Ellis from leading the casino group’s $18 billion Chapter 11 restructuring.
Jones Day, the junior bondholders’ law firm, has asked the courts to reconsider a May order that allowed the bankrupt unit of Caesars Entertainment Corp to hire Kirkland, which is led by a lawyer known in the industry as the “godfather of restructuring,” James Sprayregen.
This new motion in the bankruptcy case accused Sprayregen of giving misleading court testimony earlier this year regarding the pre-bankruptcy work Kirkland had handled for Caesars. Jones said it has found new evidence including minutes from a 2014 board meeting that this occurred.
There have been many allegations of misleading the court about potential conflicts have led to law firms being forced to disgorge fees and even criminal convictions. Currently, Kirkland & Ellis have billed $21 million for the case through May, according to court filings.
In his denial to consider the new motion at a November, 18 hearing that is scheduled, U.S. Bankruptcy Judge Benjamin Goldgar of Illinois said Jones Day should have requested court permission before filing such a restricted document. This situation will only further draw out the lengthy bankruptcy hearing even more.
Do you think that this was a smart move? Should the court have been brought the finding first instead of what did occur?