A mediator brought in to negotiate talks between global casino operator Caesars Entertainment Corporation and second-lien creditors of its bankrupt operating arm has announced that the process is now deadlocked.
According to a Bloomberg News report published in Crain’s Chicago Business, retired federal judge Joseph Farnan, who was brought in to mediate the meetings, revealed that the casino giant was now unwilling to negotiate further with creditors.
“I believe that there is currently no likelihood of material progress in the discussions,” Farnan told Bloomberg News.
Caesars Entertainment Corporation is not bankrupt but its Caesars Entertainment Operating Company subsidiary filed for Chapter 11 protections in January of 2015 after the parent restructured debt as part of a scheme that could have been designed to protect itself from lower-ranking creditors of its operating business.
The Las Vegas-based operator has been battling second-lien noteholders via five separate lawsuits over how to reorganize ever since with shareholders reportedly owed about $11 billion in total.
Caesars Entertainment Corporation was defending its restructuring actions in courts in Delaware and New York since before its subsidiary filed for bankruptcy protections with creditors complaining that it improperly transferred valuable assets out of their reach and backed out of a promise to pay the debts.
The report from Bloomberg News alleges that an investigation by a court-appointed bankruptcy examiner found that creditors could get as much as $5.1 billion through lawsuits while Caesars Entertainment Corporation countered with a deal worth $4 billion in cash, stock and debt. In return for accepting this offer, creditors would have been required to give up any current or future lawsuits relating to how the operating unit was restructured before it filed for bankruptcy.