Caesars Slides After Court Rules It Must Face Bondholder Suitsby
Caesars Entertainment Corp. tumbled the most in more than a year after a judge ruled that the casino company must face bondholder lawsuits that could force it into bankruptcy alongside its main operating unit.
The shares fell 15 percent to $6.37 at 10:20 a.m. in New York, and dropped as much as 28 percent earlier, the biggest intraday drop since July 2015. They had been down 11 percent in the past year through Friday.
The ruling by U.S. Bankruptcy Judge A. Benjamin Goldgar in Chicago on Friday means Caesars could lose court cases by mid-September in New York and Delaware worth $11.4 billion. Judges in those states have scheduled court hearings to decide whether to rule immediately against the Las Vegas-based company, dismiss key parts of the suits, or send the cases to trial.
The lawsuits are the biggest obstacle left to getting Caesars’s operating unit, Caesars Entertainment Operating Co., out of bankruptcy. Bondholders want to use the suits, which a court examiner found have a good chance of succeeding, to boost their recoveries above the 34 percent offered by the unit.
Caesars bankruptcy lawyers vowed to appeal and asked the judge to halt the suits while a U.S. district judge reviews Goldgar’s decision. Goldgar denied the request, which means CEOC must now seek an emergency order from a higher court overturning Goldgar’s ruling. Goldgar, who said that will be difficult, concluded that halting the lawsuits with an injunction wouldn’t help Caesars settle with bondholders.
On Tuesday at 4 p.m., a judge in New York will hear arguments about whether Caesars should be held immediately liable for billions of dollars that bondholders claim they are owed.
The bankruptcy is In re Caesars Entertainment Operating Co. Inc., 15-01145, U.S. Bankruptcy Court, Northern District of Illinois (Chicago).