🚀 ProPicks AI Hits +34.9% Return!Read Now

Caesars gets fresh chance at halting U.S. creditor lawsuits

Published 30/01/2016, 05:55 am
© Reuters.  Caesars gets fresh chance at halting U.S. creditor lawsuits
CZR
-

* U.S. bankruptcy judge must review refusal to halt lawsuits

* Caesars wants a decision before a March trial in New York

* Timing may coincide with release of key examiner's report

By Tracy Rucinski

CHICAGO, Jan 29 (Reuters) - The bankrupt operating unit of Caesars Entertainment Corp CZR.O will soon ask a U.S. judge to shield its parent from $12 billion of lawsuits to facilitate a debt-cutting rescue deal, but approval could set a bad precedent for creditors.

Hedge fund bondholders have sued Caesars in New York and Delaware over guarantees on the bankrupt unit's debt. While Caesars has said the lawsuits are without merit, it has warned it could join its operating unit in bankruptcy if rulings go against it.

In July, U.S. Bankruptcy Judge Benjamin Goldgar in Chicago denied a request by Caesars to stay the lawsuits, but a U.S. appeals court has since said that ruling should be reviewed.

The case returns to Goldgar early next week, handing yet another task to a judge who has expressed frustration over the complex web of dense, bitter litigation in the bankruptcy. a stay would offer the benefit of bankruptcy protection without actually filing for Chapter 11 and puts huge pressure on everyone to work out a deal. It could create a bad precedent," said Charles Tabb, a bankruptcy expert at the University of Illinois College of Law.

Junior creditors have refused to support a bankruptcy restructuring plan that envisions splitting the operating unit into a casino operator and a separate property company.

They have accused Caesars of looting the operating unit of its best assets before last year's Chapter 11 filing to benefit private equity owners Apollo Global Management LLC APO.N and TPG Capital TPG.UL . Caesars has said the transfers were fair.

The casino group, formed by the 2008 buyout of Harrah's, hopes that an independent investigation into pre-bankruptcy transactions will help pave a path for resolution among warring creditor groups.

Junior creditors believe the court-ordered investigation, which examiner Richard Davis plans to release by the end of February, will at the least show that Caesars must pump more money into the restructuring plan than the $1.5 billion it has pledged.

Caesars had asked Judge Shira Scheindlin in New York to postpone two trials on the hedge fund lawsuits until 60 days after the release of the examiner's report. She denied the request.

The company's last hope is for Goldgar to stay those lawsuits before the first of those trials begins on March 14.

University of Michigan law professor John Pottow expects Goldgar to act quickly. "He is aware of the importance of the parallel proceedings unfolding in other courts." (Editing by Matthew Lewis)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.