According to a retired federal judge brokering a restructuring deal for Caesar’s Entertainment Corp.‘s bankrupt operating unit, talks between the casino operator and a group of creditors have stalled, making settlement look unlikely at the moment.
It appears that Caesar’s declined to participate in a meeting with junior bondholders beyond the meeting held on 7 April 2016.
Caesar’s operating unit planned on restructuring c.$18bn of debt at the time of filing for bankruptcy which resulted in claims being filed by creditors, including junior bondholders.
It appears that as per Caesar’s latest settlement agreement, claims valued by the company at $4bn significantly undermined the value identified by junior bondholders at $12bn.
The operating unit’s restructuring plan would be put to vote in a Chicago court on Tuesday which faces opposition from all classes of creditors.
As per court filings made on Monday, Caesar’s operating unit stated that restructuring talks progressed well with senior and general class of creditors but its junior bondholders posed a significant challenge.
According to a lawyer representing Caesars Entertainment Corp’s bankrupt unit, the parent company would contribute c.$4bn to the restructuring of its operating unit, Caesars Entertainment Operating Co., in exchange for release of broad liabilities.
The contribution would be made in the form of equity, cash and debt, and was more than the $1.5bn pledged earlier by parent company.
According to Caesar’s lawyer, it appears the parent company’s support for its operating unit is not entirely assured.
As per the new plan filed by Caesars, potential recovery on claims filed by creditors is as follows:
- Senior lenders would recover between 113 – 117% of their claims through a combination of cash, equity and debt.
- Senior bondholders would receive between 96 – 128% on their claims through cash, debt and equity.
- Junior creditors would have their debt converted to equity
- Junior bondholders would recover between 22 – 48% of their claims subject to terms of the plan.
- General unsecured creditors would receive between 30 – 46% on their claims.
The judge overseeing the case agreed to review the outline of the new plan at a hearing in June 2016.