Creditors of Caesars Entertainment Operating Company, subsidiary of Caesars Entertainment Corp. that provides casino entertainment services, are to appear in court on Monday in a lawsuit against the company. They have been arguing that Caesars Entertainment’s main operating unit had gone bankrupt three days earlier than what has been generally acknowledged.
This is why creditors believe that they should have a payment of $468 million freed. The money has been held since last October.
The legal conflict between the gambling operator and its creditors stems from the way Caesars found itself in bankruptcy. According to creditors, the process commenced on January 12 in the state of Delaware. On Monday, they will have to convince Chicago-based US Bankruptcy Judge Benjamin Goldgar in this.
Creditors argued that on January 12, three hedge funds, with Appaloosa being one of those, involuntarily filed a bankruptcy petition against the popular casino company in Delaware. On January 15, Caesars Entertainment Operating Company filed for Chapter 11 bankruptcy protection in Chicago. The case was transferred to Judge Goldgar in Chicago immediately after.
Under federal laws, creditors have the legal right to challenge transactions that have taken place within a 90-day period before a given company files for bankruptcy. Thus, they will be able to receive back money.
If Judge Goldgar acknowledges the January 12 bankruptcy filing, unsecured creditors will be able to legally challenge a deal dating back October 2014 under which senior creditors were granted a lien on a total of $468 million in cash. In order to win the legal battle, unsecured creditors will have to convince the bankruptcy judge that they have been given grounds for filing the involuntary bankruptcy petition.
According to US Bankruptcy Judge Bruce Markell, Professor of Bankruptcy Law and Practice at Northwestern University, it is up to unsecured creditors to prove that Caesars, the alleged debtor, has not paid its debts when they were due.
The Monday lawsuit is just one of the many legal issues the major gambling operator is currently facing in its bankruptcy case valued at more than $18 million.
For instance, an Illinois-based judge is expected to rule on whether creditors-filed lawsuits against Caesars Entertainment Corp. should be stalled, thus overturning Judge Goldgar’s July ruling for the litigation to proceed. Creditors argued that TPG Capital Management and Apollo Global Management, private equity owners of the casino giant, transferred illegally a number of its most profitable properties out of creditors’ reach before the company filed for bankruptcy protection.
