Caesars Entertainment Corporation, currently preparing for Chapter 11 bankruptcy hearings in Chicago that company officials hope will eliminate billion of the billion in senior-level debt carried by its largest unit, flatly rejected a request for payment of billions owed on second-lien notes.
Delaware’s Wilmington Savings Fund Society, which represents second-lien creditors, asked the operator to pay $3.68 billion in principal and $185 million in interest on the notes. Caesars officials just said no.
The operator, in a filing with the U.S. Securities and Exchange Commission, dismissed the request for immediate payment of principal and interest as “meritless,” in light of the fact that it is in the process of gaining bankruptcy protection. The bank alleged that the creditors had a payment guarantee, a fact that the operator denies.
WSFS is the plaintiff in one of two lawsuits against the company filed by second-lien creditors. Should the bankruptcy judge in Chicago approve the restructuring plan negotiated between Caesars and first-lien creditors over four months, those lawsuits would be nullified.
Caesars’ restructuring would split its largest unit, Caesars Entertainment Operating Company, into two entities, a real estate investment trust that would own many of the company’s iconic casino resorts and a management company that would rent and run the properties. The restructuring is expected to take up to a year to finalize.
