A U.S. District judge has agreed to halt lawsuits Caesars Entertainment is facing from bondholders of debt-wracked Caesars Entertainment Operating Co., the subsidiary holding most of the company’s casinos and stuck for more than 18 months in a bitterly contested reorganization in U.S. Bankruptcy Court.
Judge Robert W. Gettleman gave Caesars until October 5 to make a case that Bankruptcy Judge A. Benjamin Goldgar, who is overseeing the restructuring of $18 billion of CEOC debt, erred when he lifted an order on August 26 shielding Caesars from an estimated $11 billion in claims from CEOC’s disgruntled second-tier lenders.
Goldgar had halted the lawsuits in June to give CEOC and bondholders a chance to negotiate a deal.
Gettleman said he would probably decide on that date whether to overturn Goldgar’s ruling or not. If not, the suits are likely to force Caesars into bankruptcy alongside CEOC. Gettleman warned the company that it faced an “uphill” fight.
The bondholder disputes are the biggest hurdle CEOC must clear before it can exit bankruptcy. The suits, which a court-appointed examiner found have a good chance of succeeding, give CEOC bondholders leverage to boost their recoveries above the 34 percent Caesars is offering.
The bondholders claim that Caesars, at the direction of its owners, private-equity giants Apollo Global Management and TPG Capital, reneged on an obligation to make good on CEOC’s debts and instead moved choice gaming assets into a profitable “good Caesars” with little debt and left them with the “bad Caesars.”
