Caesars' bankruptcy timeline, lawyers in focus at Chicago hearing

By Tracy Rucinski

CHICAGO (Reuters) - The largest U.S. casino group, bankrupt Caesars Entertainment Operating Co, squares off against its bondholders in court on Wednesday over a slew of issues ranging from a timeline for reviewing its Chapter 11 plan to the attorneys representing the company.

The acrimonious $18 billion bankruptcy has pitted junior bondholders against the casino group's parent, Caesars Entertainment, whom they accuse of pillaging the unit of its best assets before filing for Chapter 11 protection.

Caesars has said the transfers were fair, but the fight has triggered sprawling litigation that spans courts in Illinois, New York and Delaware. The bondholders, led by the Appaloosa Management hedge fund, want to show that the unit's private equity owners, and attorneys, did not consider creditors' best interests as the casino group headed for insolvency.

The layers of litigation have turned normally routine issues like setting a date for a hearing on Caesars' disclosure statement - one of the items on Wednesday's agenda - into contested matters.

Creditor groups and a U.S. bankruptcy watchdog say the crucial hearing on the plan, which aims to cut $10 billion of debt, should not happen until independent investigator Richard Davis completes his probe into pre-bankruptcy transactions.

Approval of the disclosure statement would clear the way for Caesars to seek creditor votes to approve its bankruptcy plan.

Junior creditors have also asked U.S. Bankruptcy Judge Benjamin Goldgar to reconsider his decision not to disqualify CEOC's attorneys Kirkland and Ellis from parts of the case.

The creditors, represented by Jones Day, allege that Kirkland and Ellis have a conflict of interest and have accused its partner James Sprayregen of misleading the judge in a previous trial on the issue.

Among other items on the agenda, Goldgar will address a watchdog's request for further cuts to attorney fees and expenses in a case that is costing Caesars about $1 million a day.

Last week Goldgar rejected a request by Caesars' parent to suspend a demand for pension payments by the National Retirement Fund and next week a Delaware court will address a creditor's complaint that the parent is dragging its feet in litigation over its abandoned $7 billion in debt guarantees.

The bankruptcy is In re Caesars Entertainment Operating Co Inc, U.S. Bankruptcy Court, Northern District of Illinois, No. 15-1145.

(Editing by Matthew Lewis)

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