A Chicago judge has granted global casino operator Caesars Entertainment Corporation a temporary reprieve from court actions brought by shareholders of its bankrupt operating arm.
Las Vegas-based Caesars Entertainment Corporation is attempting to restructure its Caesars Entertainment Operating Company subsidiary, which filed for Chapter 11 bankruptcy protections in January of 2015 citing debts of $18 billion, and had asked for the stay from actions in Delaware and New York while this process is completed.
Last week saw negotiations between the operator and second-lien creditors of Caesars Entertainment Operating Company reach stalemate while Caesars Entertainment Corporation, which controls properties including Caesars Palace and The Cromwell Las Vegas, now has until August 29 to finish its restructuring.
“We are committed to working closely with the creditor groups to gain their support for a restructuring agreement that provides the greatest recoveries to creditors and positions the business to continue to operate and grow substantially,” Stephen Cohen, spokesperson for Caesars Entertainment Corporation, told Bloomberg News.
However, in his decision, federal bankruptcy judge Benjamin Goldgar stated that the reprieve was “much shorter” than the company had originally requested while declaring the chances of any renewal past late-August would “be slim”.
In their court cases, the junior creditors allege that Caesars Entertainment Corporation illegally shifted profitable assets out of its operating arm and into other divisions prior to bankruptcy. The lawsuits further contend that the operator’s hedge fund owners, Apollo Global Management and TPG Capital, conspired to ensure that the parent was absolved from any responsibility to honor the debts.
The Delaware trial, which concerns $3.7 billion of Caesars Entertainment Operating Company debt, was scheduled to start last Thursday while the New York case relating to $7 billion was due to commence next week. In its defence, Caesars Entertainment Corporation Caesars argued that it would be forced to join its subsidiary in bankruptcy if deemed responsible for all of the debt.