Second-tier bondholders of Caesars Entertainment Corporation lost their bid for quick decision in their lawsuit against the operator, which alleges that 2014 transactions including stock sales to transfer 0 million in unsecured bonds to operating unit Caesars Entertainment Operating Company (CEOC) in advance of its bankruptcy violated the federal Trust Indenture Act (TIA).
The bondholders had requested a quick ruling on Caesars’ action to cancel the guarantees on the loans, an action taken in December 2014. Parent Caesars Entertainment refused to make its interest payment on the loans that month, and CEOC filed its bankruptcy petition only weeks later. The plaintiffs in the lawsuit wanted a quick decision, which could force the parent company into bankruptcy and restore the operator’s obligation to repay the debt.
U.S. District Judge Shira Scheindlin ruled that material disputes in connection with the 2014 stock sale warrant resolution via a full trial, as opposed to a quick ruling sought by the plaintiffs.
Caesars, meanwhile, is seeking to delay any decision on the lawsuit until at least 60 days after an independent examiner appointed by U.S. Bankruptcy Judge A. Benjamin Goldgar in the CEOC case completes a report of his investigation of the disputed asset transfers.
The transfers are crucial to a restructuring deal hammered out with senior-level creditors over several months last year, which would reduce CEOC’s debt from $18 billion to around $8 billion.
The bankrupt CEOC division recorded $29.6 million in net profit for November, according to a monthly securities filing required while the company is under Chapter 11 protection
