Noteholders say Caesars fraudulently transferred gaming assets
Aug 5 (Reuters) - Caesars Entertainment Corp was sued by noteholders who said billions of dollars of assets were fraudulently transferred from the reach of creditors in what they said was preparation for a default on some of its $25 billion in debt.
Wilmington Savings Fund Society, the noteholder representative, filed the lawsuit overnight in Delaware's Court of Chancery and seeks to unwind recent sales of major Las Vegas properties such as Octavius Tower by Caesars Entertainment Operating Co Inc.
Caesars Entertainment has said it was preparing the CEOC unit for a stock market listing.
Caesars Entertainment has said the asset transfers allowed CEOC to build a cash pile of more $3 billion while shedding its most capital-intensive projects.
Noteholders said the moves were aimed at protecting key assets from the reach of creditors.
"The complaint demonstrates that the Caesars Entertainment Operating Co has made numerous transfers over the past several years that worsened its already distressed financial condition and were abusive to its creditors," Jones Day lawyer Bruce Bennett said in a statement.
The law firm represents Wilmington Savings Fund Society, the indenture trustee for the 10 percent second-lien notes due 2018.
CEOC is responsible for much of the debt taken on when private equity firms Texas Pacific Group and Apollo Management led the 2008 leveraged buyout of Harrah's Entertainment Inc to create Caesars.
Spokesmen for Caesars Entertainment, TPG and Apollo did not immediately respond to requests for comment.
CEOC's moves have included selling properties to a subsidiary of Caesars Entertainment, known as Caesars Entertainment Resort Properties, and to Caesars Growth Partners. The noteholders said Growth Partners was controlled by TPG and Apollo, although it was 58 percent owned by Caesars Entertainment.
The lawsuit also names as defendants TPG founder David Bonderman, Apollo founding partner Marc Rowan and other partners from the two private equity firms.
The lawsuit is also seeking unspecified damages.
The case is Wilmington Savings Fund Society FSB v Caesars Entertainment Corp et al, Delaware Court of Chancery, No. 10004 (Reporting by Tom Hals in Wilmington, Delaware; Editing by Lisa Von Ahn)