‘Too late to halt lawsuits against Caesars’: bankruptcy Judge Goldgar says

U.S. bankruptcy judge Benjamin Goldgar, who was overseeing Caesars Entertainment’s operating unit’s bankruptcy stated that it would be difficult to halt bondholder lawsuits against the company in New York and Delaware given that proceedings had already begun.

Several hedge funds were suing the parent casino company for a total of $11.4bn, as it reneged on guarantees on bonds issued by its operating unit, which filed for bankruptcy in January 2015.

Parentco Caesars was planning to pump about $4bn into its operating unit to help restructure it.

Legal action against the parent could jeopardize the funding and force it into bankruptcy as well, the unit argued in seeking an injunction to stop the lawsuits.

Caesars has the right to terminate its funding agreement by 22 June 2016 if the judge does not halt the lawsuits by 15 June 2016, the unit’s lawyers said at the hearing.

The operating company of Caesars has spent about $1.1bn on interest payments on its first lien debt and administrative expenses. Further, if the parentco files for bankruptcy, it may incur additional expenses of $200m in restructuring costs.

Separately, according to an independent examiner’s report in March 2016, Caesars and its private equity sponsors Apollo Global and TPG Capital could face $5bn in damages from the operating unit’s bankruptcy. Junior bondholders are claiming $12.6bn as part of the bankruptcy.

Source: Reuters

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