- Company asks bankruptcy judge for extension to work on plan
- Casino seeks to begin potential sale process in October
Caesars Entertainment Operating Co. asked a bankruptcy judge for more time to reorganize, saying it may adjust its restructuring plan by starting a potential sales process this month, while trying to persuade dissident junior creditors to drop their opposition.
The company hasn’t agreed to sell any assets, but plans a “marketing process” that will value its reorganization proposal by soliciting bids from potential buyers that Caesars chose to contact, according to papers filed late Wednesday in Chicago bankruptcy court.
Caesars has a deal with its two most senior creditor groups: bank lenders and secured bondholders who are together owed about $12 billion. The Las Vegas-based company hasn’t been able to reach a deal with a majority of its middle-tier bondholders or unsecured creditors on how to cut debt and reorganize under Chapter 11 of the U.S. Bankruptcy Code.
“There are numerous unresolved issues that must be addressed to bring these Chapter 11 cases to conclusion,” the company said in court papers. Caesars asked the judge to extend to March 15 its exclusive right to file a reorganization plan. Without that extension, lower-ranking creditors could develop and seek court approval of their own proposal.
Before filing for bankruptcy in January, Caesars won senior creditor support for a plan to reduce its $20 billion debt load by slashing what it owes to lower-ranking bondholders. Under a restructuring agreement currently backed by about 80 percent of bank lenders and senior noteholders, parent Caesars Entertainment Corp. would keep control of the operating unit by contributing $1.5 billion in cash, equity and new debt to creditors, according to court records.
But hurdles remain.
In New York, bondholder suits against the parent threaten to derail the reorganization. A former federal prosecutor is investigating creditor allegations that the parent intentionally shuffled assets between units and abandoned payment guarantees to make it harder for bondholders to collect.
The company must also win support from the dissident bondholders or face a long, and expensive, battle in bankruptcy court to push through its reorganization plan. Even the exact starting date of the operating unit’s bankruptcy remains a subject of dispute.
On Thursday, a Chicago federal court upheld a ruling by the judge overseeing the bankruptcy that allowed the New York lawsuits to proceed. Parent Caesars Entertainment has said it may be forced into bankruptcy alongside its operating unit should it lose that lawsuit and be forced to pay bondholders billions of dollars.
“We believe our defenses in the New York litigation are strong, and will continue to contest those cases vigorously,” Stephen Cohen, a Caesars spokesman, said in an e-mailed statement. “The district court’s ruling on the stay did not address in any way the merits of Caesars’ position in the New York litigation.”
Caesars filed a new version of its reorganization plan on Wednesday, offering more details and updating the agreements it has with the bank lenders and senior noteholders.
The case is In re Caesars Entertainment Operating Co. Inc., 15-01145, U.S. Bankruptcy Court, Northern District of Illinois (Chicago).