October 8, 2015 / 11:21 AM / 4 years ago

UPDATE 4-Caesars tries to woo strengthened creditors with new plan

* Judge says lawsuits against Caesars parent can proceed

* Separately, Caesars improves casino restructuring plan

* Asks to extend control over bankruptcy until March 15 (Recasts with potential plan to sell assets)

By Tracy Rucinski and Tom Hals

CHICAGO, Oct 8 (Reuters) - Caesars Entertainment Corp’s bankrupt operating unit said it will seek bidders for its business while continuing talks with its warring creditors, whose position was strengthened by a key court victory on Thursday.

As part of a proposal unveiled on Thursday, the casino group formed by a $30.7 billion leveraged buyout in 2008 said it had sweetened the payout to junior creditors and would start a potential sales process to test values under its new plan.

Caesars’ operating unit, which runs 38 casinos in five countries and employs 32,000, filed for bankruptcy in January with $18 billion of debt and has been struggling to earn support for its proposals to exit Chapter 11.

Its complex debt-cutting plan has met with fierce opposition from junior creditors, who are trying to take the parent company to court on accusations that it looted the casino group of its best assets before it filed for bankruptcy.

The lawsuits against parent company Caesars Entertainment, which is not protected by bankruptcy, can proceed in New York and Delaware, a U.S. judge in Chicago ruled on Thursday, hours after Caesars revealed its new restructuring plan.

Lawyers for the operating unit, known as CEOC, had argued that those lawsuits should be put on hold or the parent company could face up to $11 billion in judgments and be forced in to bankruptcy alongside its unit.

Caesars can appeal to the U.S. Court of Appeals.

“We believe our defenses in the New York litigation are strong, and will continue to contest those cases vigorously,” a Caesars spokesman said. “In the meantime, CEOC’s senior creditors have expressed their support for CEOC’s restructuring plan and the company is continuing its efforts to reach a consensual agreement with junior creditors.”


The casino operator also asked the bankruptcy court on Thursday to extend its control over its Chapter 11 restructuring to March 15 while it tries to persuade bondholders to sign on to the plan to split the bankrupt unit into an operating company and a real estate investment trust (REIT).

As of now, opponents can start presenting their own restructuring proposals after Nov. 15.

Caesars said the new plan has the support of about $12 billion, or two-thirds, of its capital structure and that it was continuing to seek consensus with its junior creditors, who are being offered equity in the new property holding company.

The company is also still waiting for a review of pre-bankruptcy dealings from an independent examiner. The report, initially due by December, is not likely to be ready until early next year, sources with knowledge of the matter said.

Much of the company’s $18 billion in debt stems from the buyout, which was led by Apollo Global Management and TPG Capital, private equity firms that have been accused of stripping the operating unit of its best casinos and resorts.

Creditors, including affiliates of Centerbridge Partners, Oaktree Capital Management and Appaloosa Management, argued that their cases in New York and Delaware are necessary to determine if the operating unit’s debts are guaranteed by Caesars.

The filings were made with in U.S. bankruptcy court for the northern district of Illinois.

The bankruptcy is In re Caesars Entertainment Operating Co Inc, U.S. Bankruptcy Court, Northern District of Illinois, No. 15-1145. (Reporting by Tracy Rucinski in Chicago, Tom Hals in Wilmington, Delaware and Ankit Ajmera in Bengaluru; Editing by Matthew Lewis and Tom Brown)

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