Aug 5 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
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
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