The National Retirement Fund (NRF) has removed Caesars Entertainment’s three Atlantic casinos from its multi-employer pension plan, demanding a $462m withdrawal liability.
NRF, which handles pension plans for employees in casino, hotel, laundry and apparel industries, voted to expel Bally’s, Harrah’s, and Caesars Atlantic City casinos in January, demanding that Caesars withdraw and pay the liability as the debt-laden Caesars prepared to file for Chapter 11 bankruptcy.
“We did not start this. Caesars started this, and had Caesars not done what they were going to do, and did do, we would never have taken those actions,” fund chairman Jim Brubaker said on Monday.
“The ongoing bankruptcy is going to divide the company and the ownership group,” Brubaker added. “When that happens, we no longer have the ability to pursue the other parts of Caesars — the so-called good Caesars — for the obligations of the bad Caesars. So we had to act before the bankruptcy.”
According to court papers that Caesars filed on Friday, the company received the payment demand last month.
Atlantic City casino workers union President Bob McDevitt called the expulsion “a dumb move by some trustees on the fund who really weren’t thinking things through.”
“Caesars was current on its pension payments when the casinos were expelled,” McDevitt added.
McDevitt and 10 other trustees sued NRF to void the expulsions in February, calling them “unnecessary, premature, and irrational.” Caesars said it would continue making regular contributions to an escrow fund while the lawsuit is ongoing.
In another development, Caesars Entertainment Corp. sent a letter to approximately 50 retired employees, saying that the company would no longer make payments under a Supplemental Employee Retirement Plan (SERP). The letter was dated January 15, the same day Caesars’ main unit filed its Chapter 11 bankruptcy plan in Chicago.
“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,” Caesars Executive Vice President of Human Resources Mary Thomas wrote in a letter. “The senior management team and I are grateful for your past contributions and dedication in service to our guests.”