Skift Take:
Atlantic City’s collapse, Las Vegas’ hype-competition, and fallout in Macau from the crackdown on corruption add up to a very bad
time to be Caesar’s.
— Jason Clampet
Caesars Entertainment Corp.’s main operating unit can continue
business as usual for now as its owners try to rid it of about $10
billion in debt in bankruptcy court.
U.S. Bankruptcy Judge Benjamin Goldgar in Chicago granted a series of
routine motions Thursday, allowing the casino operator to pay employees
and critical vendors and maintain its customer- rewards program, just
hours after the unit filed for creditor protection while it seeks
approval of a restructuring plan.
Creditors who oppose the company’s plan asked a bankruptcy judge in
Wilmington, Delaware, Jan. 12 to put the unit into involuntary
bankruptcy to halt the restructuring. The judge in that case said
Thursday that Caesars could make routine requests to the court in
Chicago, while leaving bigger questions to be resolved later.
Goldgar said he didn’t want to exceed the authority granted to him by his counterpart in Delaware.
“Little anxious because I don’t want to go to jail any more than
anyone else,” Goldgar said, eliciting laughs from the crowd in the
Chicago courtroom.
The two bankruptcy filings this week follow months of negotiation and
litigation over how best to reduce the billions in debt that Las
Vegas-based Caesars assumed in a 2008 buyout that was arranged by Leon
Black’s Apollo Global Management and David Bonderman’s TPG Capital
Management.
Protecting Plan
Caesars’ reorganization strategy protects Apollo and TPG by putting
the operating unit and its affiliates in bankruptcy while keeping out
the parent, Caesars Entertainment Corp. The company has been building
support for the plan among senior noteholders. Lower-ranking creditors
say the restructuring treats their claims unfairly.
The operating unit, which filed with more than 100 affiliates, listed
about $12.4 billion in assets and $19.9 billion in liabilities in
Chapter 11 documents in Chicago.
It remains to be seen how the case will play out. When two
bankruptcies for the same company are sought in different jurisdictions,
the judge in the case that was filed first determines where they will
be heard.
U.S. Bankruptcy Judge Kevin Gross in Wilmington said Thursday that he would like to hold a trial this month over that question.
The company said its pact with senior debt holders requires it to
file a refinancing plan within 45 days in bankruptcy court and get a
judge’s approval of its debt-cutting deal within 110 days.
The proposal has received support from more than 80 percent of
first-lien noteholders, Caesars said in a statement. The plan would cut
the annual interest expense about 75 percent, to approximately $450
million from about $1.7 billion.
The voluntary case is In re Caesars Entertainment Operating Co. Inc.,
15-01145, U.S. Bankruptcy Court, Northern District of Illinois
(Chicago). The involuntary case is In re Caesars Entertainment Operating
Co., 15-10047, U.S. Bankruptcy Court, District of Delaware
(Wilmington).
–With assistance from Michael Bathon and Dawn McCarty in Wilmington and Linda Sandler in New York.
This article was written by Steven Church and Andrew Harris from
Bloomberg and was legally licensed through the NewsCred publisher
network.
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