Casino operator Caesars Entertainment Corp. has been given court approval to commence a restructuring process under a plan it presented last year. The move also gives the green light to its main operating unit – Caesars Entertainment Operating Company (CEOC) – to exit Chapter 11 bankruptcy protection.
Under the restructuring plan, Caesars, or the parent company, will merge with another of its subsidiaries – Caesars Entertainment Co – to bring its casinos under the same roof and to separate its property assets around the US from its actual gambling operations.
On Tuesday, Caesars’ reorganization plan was given the nod by US Bankruptcy Judge Benjamin Goldgar, who was in charge of the case since the very beginning. Although the largest hurdle has been overcome, certain gaming regulatory approvals need to be granted and financial transactions need to be completed so as for the operator to be able to finalize the plan.
CEOC filed for Chapter 11 bankruptcy protection on January 15, 2015 in a bid to offload the greater portion of an $18-billion debt. As mentioned above, the Tuesday court approval has paved the way for the unit’s exit from bankruptcy. The bankruptcy emergence is now expected to be completed later in 2017.
The past two years and the months leading to CEOC’s Chapter 11 filing have been particularly tumultuous for both the parent company and its operating unit. Legal obstacles came from all sides preventing the casino operator to proceed with the proposed restructuring.
In fact, Caesars’ legal problems began months before its operating unit filed for bankruptcy. In 2014, the company angered bondholders who argued that it had been instructed by its owners – Apollo Global Management and TPG Capital – to dispose of certain Las Vegas properties that would have helped it solve its debt issues. The aforementioned two private equity firms acquired Caesars in a $30-billion-plus buyout in 2008.
Constantly complicated by conflicts between the involved parties, the bankruptcy case took too long to be solved. Over its course, Caesars, lenders, bondholders, financial backers, and other participants in the case were bickering over where it should be heard and what was the best way for it to be solved, saw an investigation into the alleged looting of casino assets, and bid farewell to the specially appointed mediator who quit work on the case as he did not share views on how it should have been handled.
The case was to be heard either in Illinois, or in Delaware. However, Caesars hoped that an Illinois judge would be charged with it as the state is generally known to be quicker in solving matters of this kind. As mentioned above, Judge Goldgar from the Northern District of Illinois was eventually appointed to oversee the process.
In September 2016, retired US Judge Joseph Farnan, who had been appointed as the case’s mediator, announced that he would resign. Although he did not explain in detail why he had decided to quit the multi-billion-dollar case, Mr. Farnan hinted at disagreements with Judge Goldgar.
It was in September again when Caesars added final details on a $5-billion settlement to put an end to the bankruptcy case. Just when it looked as if the finalization of the restructuring plan was near, the US Trustee contested its conditions. However, it was announced on Friday, January 13, that the US bankruptcy watchdog and the casino operator had eventually reached an accord, a necessary precondition for Judge Goldgar’s final approval.
