Caesars' parent faces bankruptcy after ruling

Chicago

CAESARS Entertainment Corp may be closer to joining its operating unit in bankruptcy after a federal judge refused to protect the casino company from creditor lawsuits seeking up to US$11 billion, sending its stock plummeting.

US Bankruptcy Judge Benjamin Goldgar in Chicago denied a Caesars request to stay four lawsuits by hedge fund creditors who are owed billions of dollars by Caesars' operating unit, Caesars Entertainment Operating Co, Inc. The operating unit filed for Chapter 11 bankruptcy this year and the hedge funds allege Caesars guaranteed its debts. Caesars has said that the lawsuits are without merit.

Caesars and its private equity backers Apollo Global Management LLC and TPG Capital said that staying those lawsuits was critical to reaching a consensual overhaul of the operating unit's US$18 billion in debt. Caesars has said that it could face judgments in the coming weeks that could force it into bankruptcy. "There is now the potential that this bankruptcy can get very litigious, complex and long," said David Tawill, president of the Maglan Capital hedge fund. Shares of Caesars ended down 41 per cent at US$4.76, while Apollo fell 2.9 per cent to US$21.21, both on Nasdaq.

Creditors, including affiliates of Centerbridge Partners, Oaktree Capital Management and Appaloosa Management, have argued that their cases in New York and Delaware are necessary to determine if the operating unit's debts are guaranteed by Caesars.

Caesars, formed through the 2008 buyout of Harrah's Entertainment, has been shuffling casinos and resort properties within the company's corporate family as it struggled with unsustainable debt and mounting losses. REUTERS