Caesars Entertainment Operating Co. was denied permission to pursue a quicker-than-normal appeal of a ruling that allows bondholder lawsuits against its parent to proceed while the operating unit reorganizes in bankruptcy.
The casino giant is racing to overturn the July 22 ruling, in which a judge declined to protect Las Vegas-based Caesars Entertainment Corp. from four lawsuits that the company has said might push it into bankruptcy alongside its main operating subsidiary.
U.S. Bankruptcy Judge A. Benjamin Goldgar in Chicago Wednesday turned back a request to appeal his decision directly to the federal circuit court, bypassing the district court.
“I’m not convinced a direct appeal will expedite anything here,” Goldgar said.
Wednesday’s decision makes it more difficult for the company to halt the bondholder litigation before a Manhattan federal judge can consider imposing billions of dollars in liability on the parent.
The next option for Caesars may be to ask the district court in Chicago to expedite a ruling on Goldgar’s decision before Aug. 7, the final day for briefing in the Manhattan case.
Bruce Grohsgal, who teaches bankruptcy law at Widener University’s Delaware Law School, said the company could ask the district judge to speed its appeal or temporarily halt the New York case.
“It’s a wild case,” Grohsgal said in a phone interview. “There’s a lot of complicated litigation going on here.”
As early as next month, the Manhattan judge could rule that the parent is liable for debt it says it cannot afford to pay. Caesars was trying to prevent that by pressing for a quick ruling in the federal appeals court in Chicago.
Shielding the parent from the lawsuits until after the operating unit exits bankruptcy would buy time to persuade recalcitrant junior bondholders to accept a proposal that favors senior creditors and Caesars’ major shareholders, Apollo Global Management and TPG Capital.
“We believe our defenses in the New York litigation are strong, and will continue to contest those cases vigorously,” Stephen Cohen, a spokesman for the parent, said Wednesday in an e-mail. “The bankruptcy court’s ruling on an appeal of the stay ruling was procedural and did not address in any way the merits of Caesars’ position in the New York litigation.”
The cases are In re Caesars Entertainment Operating Co., 15-bk-1145; and Caesars Entertainment Operating Co. v. BOKF NA, 15-ap-149, U.S. Bankruptcy Court, Northern District of Illinois (Chicago)