The operating unit of Caesars Entertainment Corp, the largest U.S. casino company, filed for chapter 11 protection in Chicago yesterday to cut $10 billion of debt, but a Delaware judge intervened to halt the case before it got started, Reuters reported yesterday. The unusual legal standoff marked the start of a more public phase of complex and contentious debt negotiations. Until now, the company's attempts to cut interest payments after years of red ink have been kept mostly private. Caesars maintains it has the support of its senior noteholders to implement the bankruptcy plan, which would reduce the operating unit's debt to $8.6 billion from $18.4 billion. The bankruptcy was filed overnight yesterday by Caesars Entertainment Operating Company Inc. and 179 affiliates in the U.S. Bankruptcy Court in Chicago. However, junior noteholders, led by the Appaloosa Management hedge fund, filed an involuntary bankruptcy petition against the operating unit on Monday in Delaware. They argued at an emergency hearing in Wilmington yesterday that their case should take precedence and the bankruptcy should proceed in Delaware. Bankruptcy Judge Kevin Gross agreed to put the Chicago proceeding on hold, but said that he would allow routine "first-day" requests, such as those that would enable employees to be paid. Judge Gross asked what agreements he might be disrupting by issuing a stay and taking time to sort out which court would handle the case.
