Kirkland & Ellis is squaring off in bankruptcy court with a committee representing the junior secured noteholders in the reorganization of client Caesars Entertainment Operating Co.
The committee has asked a judge to disqualify Kirkland, claiming the firm is conflicted because it has represented the casino company’s majority owners, Apollo Global Management LLC and TPG Capital, on unrelated matters. The committee is also claiming that the firm improperly received almost $10 million in fees on the eve of the company’s Jan. 15 bankruptcy.
Kirkland had fought to keep the reorganization before U.S.
Bankruptcy Judge A. Benjamin Goldgar in Chicago, where the law firm has its roots, while the junior noteholders wanted the bankruptcy to unfold in Wilmington, Delaware. Briefs are due Monday, and Goldgar has set a hearing for April 23.
Bankruptcy is costly, and the spat over Kirkland is running up the bill. The firm said in court papers that it spent almost $10 million in the first six weeks since Caesars filed for bankruptcy. The disqualification fight will add to the cost without moving the case closer to a resolution.
James Sprayregen, a restructuring partner at Kirkland, didn’t return a call seeking comment on the disqualification effort. Neither did Bruce Bennett of Jones Day, a lawyer for the junior lienholders’ committee. Stephen Cohen, a spokesman for Caesars, said the company will stand on what’s in the court record.
The case is In re Caesars Entertainment Operating Co. Inc., 15-bk-01145, U.S. Bankruptcy Court, Northern District of Illinois (Chicago).