Caesars wins lawsuit shield to pursue 'uphill' appeal
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The marquee sign at Caesars Palace hotel is seen on the strip in Las Vegas, Nevada, U.S. February 16, 2011. REUTERS/Steve Marcus/File Photo
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By Tracy Rucinski
CHICAGO (Reuters) - A federal judge on Tuesday gave Caesars Entertainment Corp (NASDAQ: CZR) a five-week shield from $13 billion in lawsuits, capping a week of frantic court hearings as the casino group struggles to salvage a high-stakes debt-cutting plan for its bankrupt subsidiary.
Judge Robert Gettleman said at an emergency court hearing in Chicago that he will decide on Oct. 5 whether he should overturn a U.S. Bankruptcy Court ruling from Friday that cleared the way for bondholders to sue Caesars.
"It's an uphill appeal," Gettleman said. Bondholders are pressing to have their cases decided in New York and Delaware by early next year.
In January, Caesars will seek to confirm a plan of reorganization that would slash the $18 billion of debt held at its bankrupt Caesars Entertainment Operating Co Inc, subsidiary. It is desperate to keep bondholders at bay until then.
Shares of Caesars plummeted on Monday after a federal judge in Chicago ruled the company must face lawsuits that lawyers on Tuesday said were worth more than $13 billion. Previously, they had said those cases were worth $11.4 billion, but the amount continues to inflate with interest.
Gettleman's ruling by will put on hold a summary judgment hearing in New York federal court originally scheduled for Tuesday. Caesars had warned a ruling in favor of bondholders in that case could force it into bankruptcy.
Shares of Nevada-based Caesars rose less than 1 percent in Nasdaq trading on Tuesday, to $6.38.
The lawsuits were brought by investors who allege that Caesars reneged on guarantees of bonds issued by its subsidiary, known as CEOC, which filed for Chapter 11 protection in January 2015.
The bondholders have also alleged that Caesars stripped CEOC of its best hotels and casinos, such as the Linq Hotel & Casino complex in Las Vegas, leaving the subsidiary unable to pay its debts.
Caesars, which is controlled by Apollo Global Management (NYSE: APO) and TPG Capital Management [TPG.UL], has denied those allegations.
CEOC has argued its parent should be shielded from litigation because Caesars has committed to contributing billions of dollars to CEOC's reorganization plan.
(Writing by Tom Hals in Wilmington, Delaware; Editing by Meredith Mazzilli and Dan Grebler)
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