CEOC filed for bankruptcy in January 2015 amid creditor accusations that its parent Caesars Entertainment Corp (>> Caesars Entertainment Corp) and private equity sponsors Apollo Global Management LLC (>> Apollo Global Management LLC) and TPG Capital [TPG.UL] had stripped it of its best assets.

Retired U.S. Judge Joseph Farnan was tasked in March to help the feuding parties reach a settlement and lift CEOC out of bankruptcy.

"I'm convinced that I can't continue and possibly a new mediator will be able to establish a workable process," Farnan said in a letter published in a filing with the U.S. Bankruptcy court in Chicago.

It was not immediately clear who, if anyone, would take over his role.

Farnan said his resignation was not the fault of those involved with the case. Instead, he blamed the "atypical views" of mediation by U.S. Bankruptcy Judge Benjamin Goldgar, who is overseeing the case in Chicago.

In a ruling last month to lift a shield from lawsuits against the Caesars parent, Goldgar cast doubt over the effectiveness of mediation, despite a filing from Farnan citing progress. CEOC has appealed the ruling.

Goldgar had suggested that Farnan should testify in court to the progress of the mediation.

Citing confidentiality concerns, Farnan said that the court "either misspoke or doesn't understand how such disclosures would be viewed by participants and the markets."

At the heart of a web of legal disputes is how much Caesars, Apollo and TPG should contribute to the CEOC reorganization in exchange for releases from creditors' claims.

In a court filing this week, Apollo directors Marc Rowan and David Sambur said they offered in mediation to pay $250 million to settle with junior creditors but no deal was reached because the creditors appeared to be seeking several times that amount.

The two complained of what they called an attempt by the creditors to "harass" them by demanding "a staggering array" of evidence of their personal financial affairs all the way down to the "receipts and instruction manuals for their children's toys."

The creditors' lawyers did not return requests for comment.

The Caesars parent has offered over $4 billion to the unit's reorganization, though junior creditors say they have claims worth $12.6 billion.

Shares of Caesars closed down 5.4 percent at $6.32.

(Reporting by Tracy Rucinski in Chicago; Editing by Cynthia Osterman, Bernard Orr)

By Tracy Rucinski