Unhappy creditors of Caesars Entertainment Corp., seeking to put the brakes on its planned reorganization, may have temporarily given the company more freedom to operate by pushing its main unit into an involuntary bankruptcy, Bloomberg News reported yesterday. Because the chapter 11 petition filed yesterday in Delaware wasn’t voluntary, the casino company doesn’t face immediate restrictions on selling or transferring assets, as it might otherwise under the Bankruptcy Code. Nor does Caesars need a bankruptcy judge’s permission to make other major decisions, said Bruce Grohsgal, a visiting professor of bankruptcy law at Widener University School of Law in Wilmington, Delaware. The creditors that filed the involuntary bankruptcy, Appaloosa Investment LP and funds affiliated with Oaktree Capital and Tennenbaum Capital, must persuade the judge to place restrictions on Caesars that are otherwise automatic in a voluntary case, Grohsgal said. The company has the right to fight those restrictions. Last year, a trustee for the same creditors sued Caesars, claiming the parent company was plundering the best assets of its main operating unit. That case and a similar lawsuit will now be automatically halted by the unit’s involuntary bankruptcy.
