Caesars Judge Questions Need to Halt Suits Until Bankruptcy Endsby
Company’s bankrupt unit seeks to shield parent from litigation
Lawsuits are biggest remaining hurdle to ending bankruptcy
Caesars Entertainment Corp. is unlikely to get protection from bondholder lawsuits that would last as long as its insolvent operating company is in bankruptcy, a federal judge said.
U.S. Bankruptcy Judge A. Benjamin Goldgar will decide Friday whether to extend a halt on lawsuits in New York and Delaware, and if so, for how long. Goldgar made it clear that he would not give Caesars a lawsuit shield that lasts until after Caesars Entertainment Operating Co. wins approval of its reorganization plan, which can’t happen until next year at the earliest.
“I’ve said that isn’t going to happen,” Goldgar said today near the end of a three-day hearing on possibly halting bondholder lawsuits that could impose $11.4 billion in judgments on the parent company.
The lawsuits are the biggest obstacle left to getting Caesars’ main operating unit out of bankruptcy. Bondholders want to use the suits, which a court examiner found have a good chance of succeeding, to boost their recoveries to more than the 34 percent offered by CEOC.
The operating company has been in court since Tuesday hoping to persuade Goldgar to extend a ban on the lawsuits that’s set to expire on Aug. 29, in part so that negotiations could continue.
In the New York and Delaware lawsuits, bondholders claim that CEC, at the direction of its controlling owners, Apollo Global Management LLC and TPG Capital LP, abandoned a pledge to repay CEOC’s debts and divided the business into a profitable “good Caesars” with few debts and a “bad Caesars” that could be put into bankruptcy. Caesars, Apollo and TPG have all denied the allegations and vowed to prove their actions were a legitimate attempt to restructure CEOC.
CEC has offered a package of cash, stock and new debt it maintains is worth $4 billion. Bondholders say the package isn’t worth that much and want more. They also argue that Apollo and TPG should be forced to pay to settle the lawsuits.
The bankruptcy is In re Caesars Entertainment Operating Co. Inc., 15-01145, U.S. Bankruptcy Court, Northern District of Illinois (Chicago).