Apollo’s Marc Rowan Resigns From Caesars Board

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The co-founder of private-equity firm Apollo Global Management abruptly quit his seat on Caesars Entertainment Operating Co.’s board of directors after an investigation took a hard look at the role that he and his firm played in a series of deals that preceded the company’s bankruptcy.

Marc Rowan resigned from CEOC’s six-person board on March 18, according to papers filed this week in the company’s chapter 11 case.

The billionaire investor’s resignation came three days after a bankruptcy court-appointed investigator said Apollo, along with CEOC parent company Caesars Entertainment Corp. and fellow private-equity firm TPG, engineered the deals that moved CEOC’s assets out of its grasp before the company filed for bankruptcy last year, hurting the company and its creditors. The yearlong investigation identified potential legal claims against the deal’s engineers, with prospective damages of $3.6 billion to $5.1 billion.

The court papers didn’t provide a reason for Mr. Rowan’s resignation, the news of which Reuters previously reported. Reached Wednesday, an Apollo representative declined to comment on behalf of Mr. Rowan and the firm.

Court papers show that Apollo partner David Sambur remains in his seat on the CEOC board.

In a report made public March 15, examiner Richard J. Davis called Apollo “the de facto chief financial officer of CEOC.” As the company’s financial condition worsened, the examiner said Apollo and TPG—which together own a majority stake in Caesars—began working to protect their stake ahead of a CEOC or Caesars bankruptcy. The strategy came at the expense of CEOC’s creditors, Mr. Davis said.

The examiner’s findings, which Apollo generally disputes and which aren’t legally binding, outline potential legal claims that CEOC may have against a variety of parties. For instance, the examiner concludes Apollo and Messrs. Rowan and Sambur could face aiding and abetting breach of fiduciary claims and that CEOC would have a “reasonable, or better than 50/50, chance of success” in pursuing such claims.

Apollo, however, has said it “acted appropriately and in good faith” to help shore up CEOC’s financial health and “create value for itself and its employees, creditors, vendors and other stakeholders.”

Efforts are underway to secure a broad settlement of the potential legal claims identified in the examiner’s report, including mediation. CEOC is counting on such a settlement to pave the way for its exit from chapter 11 protection.

Write to Jacqueline Palank at [email protected]. Follow her on Twitter at @PalankJ