Casino operator Caesars Entertainment has asked a bankruptcy court to appoint a mediator to resolve creditor objections to the restructuring of Caesars’ main unit.
On Wednesday, Caesars filed a motion with the Illinois court handling the bankruptcy of its main unit, Caesars Entertainment Operating Co (CEOC), seeking the appointment of a neutral third party the company hopes will help bridge the gap between the rival factions.
Caesars’ filing suggested the mere promise/threat of mediation would “incentivize the parties to reach a global compromise based on the current ongoing negotiations.”
Caesars put CEOC into bankruptcy in January 2015 while suggesting a restructuring that would shave around $10b off CEOC’s $18.4b debt. But junior creditors, who stand to bear the brunt of this debt haircut, have rejected the plan as unfair.
Worried that junior creditors may file their own restructuring plans with the court, Caesars is also seeking a third extension of its control of its bankruptcy proceedings beyond its Idea of March deadline to mid-July. The warring parties will discuss both requests at a hearing in Chicago on Feb. 17.
A significant number of senior creditors support Caesars’ restructuring plan and some expressed support for the mediator proposal. But when the matter came before US Bankruptcy Judge Benjamin Goldgar on Wednesday, other creditors noted that their names are “conspicuously absent from the mediation request.”
Junior creditors have also filed lawsuits in New York and Delaware accusing Caesars of reneging on debt obligations and shifting CEOC’s most valuable assets to other Caesars divisions prior to the bankruptcy. A court-appointed examiner’s report on these allegations is due for release this month. Caesars says it could update its restructuring plan depending on the report’s findings.
Goldgar announced that he would issue a ruling on March 2 that will determine whether to pause the junior creditor lawsuits while the restructuring negotiations are ongoing. Caesars has warned that if the lawsuits are successful, the parent company will be held liable for CEOC’s debts and will likely join CEOC in seeking bankruptcy protection.
