Caesars Loses Bid to Halt Creditor Lawsuit in DelawareSteven Church and Jef Feeley
Caesars Entertainment Corp. lost a first attempt to halt a Delaware lawsuit by creditors who claim the company improperly shuffled assets to prevent debt-holders from being able to collect billions from the struggling gambling company.
Caesars gets another chance to shut down the case next week, when its main operating unit will ask a bankruptcy judge in Chicago to put the brakes on the litigation.
The casino company had asked Judge Sam Glasscock in Delaware Chancery Court to dismiss or halt the suit, arguing that a similar case should go forward in New York, where the company had asked a judge to rule that its actions were legal.
Glasscock Wednesday rejected Caesars’ argument that the debt contracts specifically require any suits to go forward in New York, and trying the case in Wilmington, Delaware, won’t harm Caesars, he wrote.
“The courthouse in Wilmington is separated from Pennsylvania Station in Manhattan by a five-minute walk and 125 miles of shiny steel rails, which may be traversed in the comfort of the business section of an Acela train in an hour and a half,” the judge wrote.
Caesars is trying to halt four lawsuits while its operating unit reorganizes in bankruptcy in Chicago. The unit sought creditor protection in January, weighed down by debt taken on when Apollo Global Management LLC and TPG Capital took the company private in 2008 for $30.7 billion.
Caesars Entertainment Operating Co. has told the bankruptcy court that its reorganization is threatened by lawsuits against the Las Vegas-based parent.
A Caesars spokesman, Stephen Cohen, said the company had no comment on the ruling.
The Delaware suit is Wilmington Savings Fund Society FSB v. Caesars Entertainment Corp., CA NO. 10004, Delaware Chancery Court (Wilmington). The bankruptcy is In re Caesars Entertainment Operating Co. Inc., 15-01145, U.S. Bankruptcy Court, Northern District of Illinois (Chicago).