Court-ordered examiner Richard Davis published a report earlier this week placing Caesars Entertainment Corp and its private equity backers, Apollo Global Management and TPG Capital, in hot water, according to reports from Reuters. The decision is related to the bankruptcy of its operating unit Caesars Entertainment Operating Co Inc.

Davis issued a 80-page report, which could potentially result in a whopping $5.1 billion in potential damages.

Davis is well known for having played a part in the Congressional investigation that resulted in the resignation of U.S. President Richard Nixon due to the infamous Watergate scandal, and for his role in the U.S.-Iran hostage crisis while working at the U.S. Treasury Department.

The investigation began last year when U.S. Bankruptcy Judge Benjamin Goldgar requested that Davis probe into bondholder allegations of fiduciary irresponsibility. Caesars disputed these claims, arguing that all deals involving its operating group were fair.

The year-long investigation by Davis cites that back in 2008, shortly after Apollo and TPG acquired Harrah's Entertainment as part of a $31 billion leveraged buyout, that the operating group was already insolvent. Due to this, Davis concluded that the operating unit owed additional fiduciary responsibilities to its creditors.

The group reorganized its operating unit conducted numerous deals without consulting its creditors, including stripping away the Linq Hotel & Casino to another Caesars affiliate. While the company was believed at the time to be looking out for its investors, Davis concluded that some of these deals involving profitable enterprises breached its responsibility to its creditors.

To the dismay of its creditors, Caesars Entertainment Corp subsequently filed for Chapter 11 bankruptcy in hopes to trim down $18.4 billion in debt to a more manageable $8.6 billion.

While Davis believes that there is a 50-percent chance of success in court for damages ranging from $3.6 billion to $5.1 billion, Caesars offered to inject $1.5 billion into Caesars Entertainment Operating Co Inc to settle the claims brought on by creditors.

Yahoo! Finance reports that Caesars and the creditors are involved in mediation in hopes of resolving the claims.

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