Jan 13 (Reuters) - Caesars Entertainment Corp will seek to give itself the legal shield of bankruptcy once its operating unit files for Chapter 11 in the coming days, a lawyer for the company’s operating unit told a judge on Tuesday.
But a lawyer for creditors who are suing Caesars called the plan “extraordinary” because the parent company will ask for the benefits of bankruptcy without actually filing for Chapter 11.
The operating company has said it plans to file for bankruptcy by Jan. 20 to cut its debt to $8.6 billion from $18.4 billion.
Its restructuring plan has the support of senior noteholders but other creditors have been trying to block the overhaul, including junior noteholders who sued the largest U.S. casino company and various subsidiaries in a Delaware court in August.
A bankruptcy judge will be asked to put on hold the Delaware lawsuit against all defendants once Caesars Entertainment Operating Co Inc, or CEOC, files for Chapter 11, Eric Seiler, an attorney for CEOC, told a court hearing Tuesday.
“You might want to wait and see what happens,” Seiler suggested to Sam Glasscock, the Delaware Court of Chancery judge hearing the case.
The defendants have asked Glasscock to dismiss the case, although Caesars is facing a similar lawsuit in New York as well.
An attorney for the junior noteholders, Bruce Bennett of Jones Day, called extending the so-called automatic stay of bankruptcy to CEOC’s parent “extraordinary relief for a third party that is not in bankruptcy.”
Bennett said he expected the lawsuit could continue against the non-bankrupt parent and subsidiaries after CEOC files for Chapter 11.
The lawsuit that Glasscock has been asked to dismiss alleges the operating company, which issued $4.5 billion in junior notes, was plundered by shareholders of the parent company and moved beyond the reach of creditors.
Caesars has said the various asset transfers moved capital-intensive projects out of CEOC to free up cash.
The case is Wilmington Savings Fund Society v Caesars Entertainment Corp et al, Delaware Court of Chancery, No. 10004 (Reporting by Tom Hals in Wilmington, Delaware; Editing by Grant McCool)