- It's too soon for hearing on disclosure statement, court rules
- Creditors' attack on Caesars' law firm is met with skepticism
Caesars Entertainment Operating Co. was denied a quick hearing on an outline of its reorganization proposal, which would have been the first step in a protracted courtroom showdown between the casino company and low-ranking creditors.
It’s too early to hold a hearing on whether the plan description contains enough information for creditors to decide how to vote on the proposal, U.S. Bankruptcy Judge Benjamin Goldgar said Wednesday in a hearing in Chicago.
The company’s so-called disclosure statement “has blanks in it,” Goldgar said. As one reason for denying approval, he cited an investigation into allegations that Caesars’ parent stripped the company of valuable assets before the company filed bankruptcy.
In bankruptcy, approval of the disclosure statement is the first major step toward winning court consent for a reorganization plan that cuts debt and ends the case.
Caesars has the support of most of its senior lenders and senior bondholders. Middle-tier noteholders and low-ranking creditors oppose the Las Vegas-based company’s proposal, saying it would pay them too little.
Fighting among the company and creditors has become so intense that some noteholders have tried three times to persuade Goldgar to limit what Caesars’ main law firm can do in the case. Goldgar said the latest attempt will “probably be denied.”
The noteholders say the law firm, Kirkland & Ellis LLP, is too close to Caesars’ parent and its main shareholders. The noteholders want to bar the firm from settling the disputes at the heart of the bankruptcy, the claim that the parent stripped Caesars of assets before the filing in January.
The case is In re Caesars Entertainment Operating Co., 15-01145, U.S. Bankruptcy Court, Northern District of Illinois (Chicago).