The Caesars Entertainment operating unit that filed for protection under Chapter 11 of the U.S. Bankruptcy Code early last year asked a judge Monday to block a group of creditors seeking to sue the parent of the debt-crippled casino operator.
The casino operating unit is attempting to emerge from the bankruptcy proceedings in a complicated deal that threatens to break down over the value of the Paradise, Nevada-based gaming and hospitality group, which globally owns and operates more than 50 casinos and hotels under multiple brand names, such as Harrah’s and Planet Hollywood.
“It appears that there continues to be quibbling over who gets what part of the pie,” retired U.S. Bankruptcy Judge Bruce Markell, who teaches law at Northwestern University, told Reuters, which first reported the request for judicial intervention Monday.
Buried under $18 billion in debt, the casino operating unit filed for bankruptcy protection in January of last year. According to a filing made in Pennsylvania a couple of months later, the private equity firms Apollo Global Management and Paulson & Co., based in New York, and TPG Capital, co-headquartered in Fort Worth, Texas, and San Francisco, owned almost one-half of the parent company.
Caesars Entertainment has offered $4 billion to pull the casino operating unit out of bankruptcy, but a group of creditors say the unit is worth $12 billion, and its members have accused the private equity-backed parent of raiding the most lucrative assets for itself in advance of the filing for bankruptcy protection. The publicly traded Caesars has a market capitalization of $1.2 billion.
The casino operating unit faces lawsuits in Delaware and New York that have been filed by hedge fund bondholders over guarantees of its debt. Caesars Entertainment has denied all allegations of wrongdoing, as the dispute threatens to send the entire process back to square one.