Financially struggling casino operator Caesars Entertainment Corp has been granted a four-month extension on retaining control over the bankruptcy proceedings of its main unit.
On Wednesday, US Bankruptcy Judge Benjamin Goldgar approved Caesars’ request for an extension on its exclusive control over the bankruptcy of its main unit, Caesars Entertainment Operating Co (CEOC). This marks the second extension CEOC has received, and will push the new deadline from Nov. 15 to March 15, 2016.
CEOC filed for Chapter 11 protection in Illinois in January, citing over $18b in debts. The company has been trying to sell its creditors on a restructuring plan but since the plan calls for many of the second-lien note holders to receive pennies on the dollar, these creditors – who hold about $6b of CEOC’s debt – aren’t playing ball.
Goldgar’s ruling prevents these junior creditors from proposing alternative restructuring plans, but it has no effect on the lawsuits many of these same creditors have filed in New York and Delaware. Last month, Caesars lost a bid to prevent these suits from going forward while its bankruptcy proceedings are still in play.
The junior creditors have accused CEOC’s parent company Caesars Entertainment Corp (CEC) of stripping CEOC of its most valuable assets pre-bankruptpcy in order to shield them from creditors. Should these suits be decided in the creditors’ favor, CEC’s assets would be up for grabs and the company has warned that it would also have to file for Chapter 11.
Given the animosity between Caesars and its junior creditors, quite what the company hopes to accomplish over the next four months is questionable. Earlier this week, our own Rafi Farber suggested Caesars’ second extension request was simply a delaying tactic, intended to wear down the junior creditors in the hopes they’ll get fed up and accept Caesars’ lowball offer. It’s really the only card Caesars had left to play. But what if the creditors don’t blink?
One can’t help but note the irony that Caesars’ new March 15 is commonly known as the Ides of March, i.e. the date on which Julius Caesar was turned into a dagger pincushion by his former allies. Wonder how many top Caesars execs will find Kevlar vests under this year’s Christmas tree?
