By Tracy Rucinski
CHICAGO (Reuters) – A U.S. judge on Wednesday temporarily halted lawsuits seeking $11.4 billion in damages from Caesars Entertainment Corp The bankruptcy of the operating unit, Caesars Entertainment Operating Corp (CEOC), in January 2015 has pitted some of the most aggressive investors on Wall Street against each other.
Several hedge funds that own bonds are suing the Caesars parent in New York and Delaware, alleging it reneged on guarantees from bonds issued by CEOC prior to the unit’s $18 billion bankruptcy. Caesars is facing $7.7 billion in claims in New York and $3.7 billion in Delaware from the bondholder lawsuits.
Caesars has denied wrongdoing and said it could be forced into bankruptcy along with its operating unit if courts rule in favor of the bondholders.
Shares of Caesars jumped 9.3 percent at $8.58 on the Nasdaq.
CEOC lawyers said they were close to reaching an agreement on its reorganization, which hinges on a $4 billion contribution from its parent to settle allegations of asset-stripping. Judgements against the parent company would derail the plan, the lawyers said. “There better be some talking and it better be fast,” Judge Benjamin Goldgar said during a hearing in U.S. Bankruptcy court in Chicago.
He said the chances of Caesars obtaining further injunctive relief past Aug. 29 were “small.”
Caesars said it welcomed Goldgar’s decision and will focus on resolving the case.
“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,” Caesars spokesman Stephen Cohen said. Junior creditors led by Appaloosa Management have refused to support the reorganization plan. They accuse Caesars’ private equity owners Apollo Global Management LLC Last year Goldgar decided not to halt the New York and Delaware lawsuits but the 7th U.S. Circuit Court of Appeals asked the bankruptcy judge to reconsider. That led to an injunction that expired last month. “The extension may be consistent with the logic of the 7th circuit decision but everyone has to realize that they’re running out of time,” said Douglas Baird, a professor at the University of Chicago Law School. Junior creditors want to pursue $12.6 billion in claims against Caesars and propose their own reorganization plan.
(Editing by Jeffrey Benkoe)
U.S. judge gives Caesars temporary reprieve from lawsuits
By Tracy Rucinski
