April 23, 2015 / 5:47 PM / 5 years ago

Creditors, Caesars spar over control of casino bankruptcy

April 23 (Reuters) - Creditors of the bankrupt operating unit of Caesars Entertainment Corp said they wanted to stop the casino company from extending the period when it has exclusive control of its Chapter 11 reorganization so other plans could be proposed.

The creditors filed objections late on Wednesday to the request by the operating unit to extend to Nov. 15 from May 15 its exclusive right to propose a plan to cut its $18 billion in debt.

The operating unit filed for bankruptcy in January, and creditors rarely oppose a company extending exclusive control so early in the case.

Among those objecting were the company’s lone allies, a group known as the first-lien noteholders who preferred an extension to September.

The case of Caesars Entertainment Operating Co Inc, the largest U.S. casino operator, has been marked by bitter feuding with creditors. They have accused the parent company of stripping the operating unit of key properties such as the Linq Hotel & Casino in Las Vegas.

The parent is controlled by private equity firms Apollo Global Management LLC and TPG Capital Management, which created Caesars from the $30.8 billion leveraged buyout of Harrah’s Entertainment in 2008. The parent company, which is not bankrupt, has said the operating unit was paid fairly for the property transfers, and U.S. Bankruptcy Judge Benjamin Goldgar in Chicago has ordered an independent examiner to review the deals.

The unit has proposed a reorganization plan that will split it into a casino operator and a real estate investment trust, which should create value for creditors because REITs tend to be more highly prized by Wall Street.

Creditors oppose the plan, saying it would shield Apollo and TPG from lawsuits over the property transfers.

“The evidence will show that the debtors have conducted themselves in this case just as they did prior to bankruptcy - with the illicit objective of enriching their controlling shareholder at the expense of unsecured creditors,” said the filing by the official committee of second-priority noteholders.

The noteholders are at the back of the line to be repaid by in the bankruptcy.

A hearing on the exclusive period is scheduled for Wednesday.

Shares of Caesars Entertainment were up 0.7 percent at $9.75 in afternoon Nasdaq trading. The stock has fallen about 22 percent since the operating unit filed for bankruptcy.

The case is In re: Caesars Entertainment Operating Co Inc, U.S. Bankruptcy Court, Northern District of Illinois, No. 15-01145. (Reporting by Tom Hals in Wilmington, Delaware; Editing by Lisa Von Ahn)

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