Ex-Caesars employees loses retirement income because of bankruptcy
12 March 2015
An undisclosed number of former Caesars Entertainment Corporation employees have lost their retirement income because of the casino company’s bankruptcy restructuring of its largest operating division. The retired employees were notified by the company through a form letter/memorandum that was sent January 15th , the same day Caesars Entertainment Operating Co. filed a pre-packaged Chapter 11 bankruptcy plan in Chicago that is expected to eliminate $10 billion of debt.
The employees were told the company would no longer make payments under a Supplemental Employee Retirement Plan (SERP). A Caesars official familiar with the matter but not authorized to speak on behalf of the company said there are several similar retirement plans offered by other companies that were subsequently acquired by Harrah’s/Caesars.
He said there are “fewer than 50 people” under these plans affected by the bankruptcy. The Caesars official said the bankruptcy filing did not affect the company’s 401(k) retirement plans or other deferred compensation programs. Wilson, 68, who lives in a rural community 30 miles east of St. Louis but spends winters in Needles, California, said she feels cast aside by the company. She has been receiving $4,000 per month since she fully retired from the gaming industry at the end of 2003.
She and her husband both receive Social Security payments. “Retirees count on these pensions,” Wilson said. “The company went to great lengths to say they are taking care of their current employees, but what about us? We lived on that pension and now it’s been totally taken away. It’s quite devastating.
According to the memorandum, the payments were halted for Wilson and other former Caesars employees who received SERP distributions. “Under the bankruptcy code, the SERP payments you were receiving are considered a general unsecured pre-petition obligation of the debtor and cannot be paid without specific authorization from the bankruptcy court. “The memorandum was signed by Caesars Executive Vice President of Human Resources Mary Thomas.
Another former Caesars employee, who asked not be identified, received the same letter as Wilson. He said he was part of Hilton Gaming’s retirement fund. Hilton Gaming was the predecessor to Park Place Entertainment, which acquired Caesars World in 2000. Park Place eventually took on the name Caesars.
In its bankruptcy filing, CEOC listed more than $19.8 billion in total obligations, but did not list how much of the debt is unsecured. Of the top 50 unsecured creditors, the largest amount is $530 million owed to Law Debenture Trust Co. of New York. The SERP funds were not listed.