"A move by Sen. Harry Reid (D-Nev.) to help Caesars Entertainment Corp. avoid bankruptcy has put the Senate Democratic leader at odds with one of his star colleagues, Sen. Elizabeth Warren (D-Mass.).
Reid is seeking to insert language in an end-of-year spending bill that would allow the gaming corporation to restructure the debt of a subsidiary out of court despite opposition from holdout bond holders.
The problem is that the language could also help Education Management Corp. — a top target of Warren’s.
She argues the private education company, which operates for-profit colleges such as the Art Institutes, Argosy and Brown Mackie, uses “scam recruiting practices” to bilk students.
Earlier this year, Warren called for tougher federal oversight of for-profit colleges, and last month she sent a letter to the Departments of Education and Justice criticizing a settlement with Education Management for being too lenient.
Decisions by two courts involving Caesars and Education Management make it more difficult for corporations to cut their debts without going into bankruptcy if their debt-cutting plans are opposed by minority shareholders.
Reid’s language is meant to override those decisions to allow Caesars to cut its debt without going through bankruptcy despite opposition from some stockholders.
He argues the language has been drafted so that it would not apply to Education Management, but allies of Warren say it does not pass muster.
Adam Levitin, a law professor at Georgetown University who is a friend and former student of Warren’s, said Reid’s legislative language is poorly drafted and will not exempt Education Management from protection."
3 comments:
Isn't there a fist that Harry Reid can walk into sometime soon?
Obama "saved" GM at the cost of its bondholders and now Reid proposes to save Caeser's at the cost of its stockholders. After all, they're mostly middle class so screw 'em, the law be damned.
Stocks? Bonds? What is this strange language you are speaking??
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