Caesars Entertainment Corporation Granted Stay from Debtor Lawsuits over Bankruptcy
June 20, 2016
Remains Under Fire for Questionable Asset Transfers in 2014
Caesars Entertainment Corp has been going through negotiations to restructure its bankrupt central operations. They have recently won a temporary reprieve by a US Bankruptcy Court Judge, Benjamin Goldgar, from being the subject of lawsuits from its creditors.
Last Wednesday, June 15, Caesars Entertainment Corp received this beneficial ruling, which would suspend its vulnerability to such lawsuits up until the 29th of August. Though it was not as long as Caesars originally asked for, it should help Caesars get some breathing room to plan its restructuring. Judge Goldgar claimed extensions on the lawsuit holds wouldn't be likely.
Judge Goldgar warned Caesars Entertainment Corp against procrastinating on its restructuring plans further. “There better be some conversations. You’ve got that time. Use it,” he said. On June 22, all parties will reconvene to hear Caesars Entertainment Operating Co’s hopes for a debtor vote on its current plans for restructuring.
Caesars Entertainment Corp filed for bankruptcy in January of 2015. It claimed to have debts of more than $18 billion.
Its junior creditors would be subject to the burden of most of Caesars' restructuring plan. Under Caesars Entertainment Corp's current suggestions, they would only be able to regain about 22% to 48% of their investments. Senior creditors would be heavily favored.
These are the entities that claim Caesars has broken the law by diverting its profits into other arms of its business before the bankruptcy claims. Just before opening its filings, in April of 2014, Caesars Entertainment Corporation transferred the most profitable of its assets to its Caesars Growth Partners in what critics are saying was an attempt at exaggerating the debt load of its main operations before bankruptcy. If the debtors' suit is successful, Caesars Entertainment Operating Co claims it may too be required to claim Chapter 11 bankruptcy.
TPG Capital and Apollo Global Management have been accused by the credit holders of illegally cooperating to escape repayment of Caesars' huge debts.
In Delaware, Caesars Entertainment Operating Co is in court over $3.7 billion in debt, a case that would take place last Thursday. In New York, Caesars Entertainment Operating Co owes almost twice as much--around $7 billion--and before this ruling, would have had a hearing in court sometime in the coming days.
Caesars Entertainment Corporations' initial offer was admittedly puny, and was recently amended to give creditors an additional $2.5 billion. Caesars listed its own debt in excess of $18 billion last January. Their initial offer would have subtracted a whopping $10 billion from those debts. Over the course of the negotiations, CEC's attorney David Seligman claimed that the creditors' deal had been "substantially improved down the line." Seligman also claimed "all the blanks are filled in."
An attorney for Oaktree Capital and Appaloosa Management, Sidney Levinson, said his clients "have a different view."