Late Friday, a USA bankruptcy judge in Chicago said that Caesars Entertainment, the parent company of the bankrupt Caesars Acquisition Co., could not shield itself from about $11 billion in claims from bondholders, according to a Reuters report.
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On Tuesday at 4 p.m., a judge in NY will hear arguments about whether Caesars should be held immediately liable for billions of dollars that bondholders claim they are owed. According to the company, the guarantees are no longer valid.
On Friday, U.S. Bankruptcy Judge Benjamin Goldgar in Chicago declined to renew a stay on litigation by bondholders who allege Caesars reneged on guarantees of bonds issued by unit Caesars Entertainment Operating Co. The current injunction expires on Monday. Depending on what is ruled, Caesars may be required to honor the amount of $3.7 billion in debt guarantees again. On Tuesday, Caesars faces a potential ruling in NY. Another suit over $3.7 billion in debt guarantees will be argued before a DE state court in September.
Caesars filed an appeal against Goldgar’s decision on Friday.
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Caesars Entertainment Operating Co., which filed for Chapter 11 protection in January 2015, was asking for a third court shield from lawsuits against its parent to protect a multibillion-dollar contribution to its reorganization plan. The major obstacle in CEOC’s chapter 11 case is that it is receiving united creditor backing for an extensive deal to settle the legal allegations against the casino company and the private equity firms. The court’s refusal to extend the shield puts Caesars’ “substantial contribution” to CEOC’s reorganization plan “at serious risk”, a Caesars spokesman said in an email. The judge however did not look satisfied with the entertainment company’s efforts to negotiate the deal.
