Judge approves ex-Watergate lawyer to probe Caesars' unit bankruptcy

CHICAGO (Reuters) - A lawyer who made his name as a Watergate prosecutor was approved on Wednesday to begin investigating a series of corporate deals in the lead-up to the bankruptcy of the casino operating unit of Caesars Entertainment Corp .

Creditors allege those deals looted billions of dollars from the operator of 38 casinos for the benefit of the parent company, which is not bankrupt, and its private equity backers, Apollo Global Management and TPG Capital.

Richard Davis, a former partner at bankruptcy powerhouse Weil Gotshal & Manges, will investigative whether the operating unit received fair value for choice properties such as the Linq complex in Las Vegas. Davis was given a wide-ranging role by the judge who tasked him with investigating any apparent conflicts of interest by the bankrupt unit.

"You're game for this?" Judge Benjamin Goldgar in Chicago asked Davis before approving him for the role of examiner. "You're in."

Davis made his mark early in his career as a member of the Watergate Special Prosecution Force that investigated the administration of President Richard Nixon, who resigned in disgrace in 1974. Davis was tasked with questioning Nixon about an 18-1/2-minute gap on White House tapes.

Davis also worked in the U.S. Treasury Department as assistant treasury secretary where he was "deeply involved" in the financial agreements that led to the release of hostages during the Iranian hostage crisis, according to court records.

Davis has served in several investigative roles both in and out of bankruptcy.

Most recently he was charged with probing the dealings of bankrupt hedge fund Fletcher International, whose founder, Alphonse "Buddy" Fletcher, is the husband of Ellen Pao, the plaintiff in a high-profile gender discrimination lawsuit against venture capital firm Kleiner Perkins Caufield & Byers.

Examiners can have a dramatic effect on corporate bankruptcy. Caesars' creditors have cited the examiner in the bankruptcy of energy producer Dynegy Holdings, whose report spurred the return of assets to the bankrupt company that had been transferred out prior to the filing of a Chapter 11.

Davis is required to file an interim report every 45 days, and a final report 60 days after he completes the investigation.

Shares of Caesars ended down 4.9 percent at $9.40 on the Nasdaq in a sharply weaker overall market.

The case is Caesars Entertainment Operating Co Inc, U.S. Bankruptcy Court, Northern District of Illinois, No. 15-B-1145

(Writing by Tom Hals in Wilmington, Del.; editing by Matthew Lewis)

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