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The Supreme Court will not be deciding whether bankruptcy courts retain power to reject labor contracts after they have expired by their own terms, according to Rochelle’s Daily Wire today. In Hostess Brands Inc., Bankruptcy Judge Robert Drain from White Plains, New York, held in 2012 that the power to terminate a collective bargaining agreement ends when the contract expires, even though labor law requires the company to abide by the expired contract until the National Labor Relations Board declares impasse in negotiations. Judge Drain relied on the language of Section 1113. Focusing instead on the purpose of the statute, the Third Circuit held to the contrary in January and found power to reject an expired union contract in the reorganization of Trump Entertainment Resorts Inc. The union filed a petition for certiorari that the Supreme Court denied on May 31, likely because the Third Circuit was the first court of appeals to decide the issue. Read more. 

The Unite Here Local 54 v. Trump Entertainment Resorts Inc. case was a topic of discussion on last week’s “Eye on Bankruptcy” program. Click here to watch. 

As Congress heads toward its summer recess, Oaktree Capital Group LLC is urging lawmakers not to cut any back-room Washington, D.C., deals that help its opponents in a fight over Caesars Entertainment Corp. with billions of dollars at stake, Bloomberg News reported yesterday. Oaktree is expressing concern that Apollo Global Management LLC and TPG Capital Management — the private equity firms that own Caesars — will persuade lawmakers to slip a provision related to the Las Vegas-based casino operator into a broader bill, according to documents obtained by Bloomberg. Potential outlets could include Congress’s response to the Puerto Rico debt crisis or legislation to keep the Federal Aviation Administration in business ahead of a July deadline. “We understand that Caesars and its sponsors are now again asking Congress to approve the” provision, Oaktree Vice Chairman John Frank wrote in a May 18 letter to House Speaker Paul Ryan and Minority Leader Nancy Pelosi. Since no stand-alone legislation has been proposed, “we are left to assume its supporters hope, once again, to add the rider to a ‘must-pass’ bill,” he wrote. The dispute is centered on the Trust Indenture Act, a Depression-era law meant to protect the rights of bond investors. Caesars and its owners want new legislation to counter a court ruling they say distorts the act’s original intent and gives holdout bondholders too much power in restructuring talks. Read more.

Listen to an ABI podcast from December 2015 between ABI Resident Scholar Prof. Melissa Jacoby and Prof. Mark Roe of Harvard Law School talking about legislative action at the time on a proposed omnibus appropriations rider that would amend the Trust Indenture Act of 1939. The proposed language was not included after opposition by stakeholders and academics. 

Caesars Entertainment Corp. has offered $4 billion in a new plan to help its casino operating unit emerge from chapter 11, a lawyer for the unit told a bankruptcy judge yesterday, Reuters reported. Under the new plan, creditors will receive a bigger payout than under an initial framework restructuring agreement, which included a contribution from the Caesars Entertainment parent worth $1.5 billion. The initial agreement was widely opposed by creditors of the bankrupt unit, who are owed a collective $18.4 billion. They alleged that the parent, Caesars Entertainment, stripped away many of the best casinos and resorts and put them beyond the reach of the operating unit's creditors, something the parent has denied. "In terms of recoveries to creditors, they are substantially improved down the line" under the new plan, lawyer David Seligman said yesterday in bankruptcy court on behalf of the Caesars unit. Under Wednesday's proposal, once Caesars Entertainment completes its previously announced merger with its affiliate, Caesars Acquisition Co., the combined company will issue $1 billion of convertible notes to the operating unit's creditors. Creditors will also receive up to 47.5 percent of the common stock in the post-merger Caesars Entertainment and cash, valuing the entire contribution from the parent at $4 billion.

An affiliate of casino giant Caesars Entertainment Corp., which is in danger of following its biggest unit into bankruptcy proceedings, is considering a sale of its fast-growing mobile- and social-games business, Dow Jones Newswires reported on Friday. Caesars Entertainment's interactive unit is working with investment bank Raine Group LLC to evaluate unsolicited bids that have exceeded $4 billion. Suitors include financial firms and gaming, media and entertainment companies. Caesars Interactive Entertainment, or CIE as the unit is known, is one of the largest online, mobile- and social-gaming companies, with annual sales of nearly $800 million. It notched year-over-year revenue growth of 28.8 percent in the first quarter.

Investors in the $225 billion distressed-debt market are watching a Manhattan appeals court to see whether judges can impose what the U.S. Chamber of Commerce has called “revolutionary” new limits on out-of-court restructurings, Bloomberg News reported today. Three federal judges will hear arguments today in a $14 million dispute over how much corporate borrowers can alter debt terms before they run afoul of a Depression-era law designed to protect bondholders. Last year, a lower-court judge set a new, more stringent standard that critics say would force more companies into bankruptcy by limiting their restructuring options. Caesars Entertainment Corp. is embroiled in similar bondholder disputes and has said that it risks bankruptcy if the appeals court lets the new interpretation stand. The gambling giant, which put its main operating unit into chapter 11 last year, faces five lawsuits by bondholders, or their trustees, who are owed $11 billion and say the company violated the 1939 Trust Indenture Act, or TIA. In June, U.S. District Judge Katherine Polk Failla held that Education Management Corp., a for-profit college operator, violated the TIA by forcing unsecured creditors including Marblegate Asset Management to choose between accepting stock in a reorganized company or standing aside as assets that could have covered their debts were transferred out of reach. Read more. 

In December, there were legislative efforts to include a proposed omnibus appropriations rider that would amend the Trust Indenture Act of 1939. Those efforts were postponed. Listen to an ABI podcast between ABI Resident Scholar Melissa Jacoby and Prof. Mark Roe from December on the issues surrounding TIA. 

Caesars Entertainment Corp. said on Friday that it appointed a retired bankruptcy judge to the new role of chief restructuring officer after it warned it could be forced into chapter 11 protection, Reuters reported on Friday. Caesars is facing billions of dollars of lawsuits by creditors of its bankrupt casino operating unit, Caesars Entertainment Operating Co. (CEOC), who have accused the parent of pillaging the unit before it filed for chapter 11 protection last year. Caesars has denied the allegations. However, it said in a statement on Friday that in the event it had an adverse court ruling or if CEOC lingered in bankruptcy, "it is likely that Caesars Entertainment would seek reorganization under chapter 11 of the bankruptcy code." Caesars said that due to mounting legal costs its independent director committee had recommended the appointment of Robert Gerber, who retired as a U.S. Bankruptcy judge for the Southern District of New York in January, for the new role. An independent examiner said in March that Caesars may be responsible for up to $5.1 billion for transactions involving CEOC prior to its bankruptcy. Read more. 

Learn more about a CRO’s responsibilities with ABI’s The Chief Restructuring Officers Guide to Bankruptcy: Views from Leading Insolvency Professionals.

Bankruptcy Judge Benjamin Goldgar ruled yesterday that creditors of the bankrupt operating unit of Caesars Entertainment Corp will have an additional 15 days to decide if they object to the casino company's bankruptcy exit plan, which still lacks key details, Reuters reported. "It's hard to shoot a moving target," Judge Goldgar said at an emergency hearing before postponing the deadline for creditor objections to May 17. He was responding to junior creditors' complaints in a court filing that the plan omits "virtually all of the information that creditors actually care about." Objections to the plan were initially due on yesterday. At the heart of the uncertainty is how much Caesars, backed by private equity groups Apollo Global Management LLC and TPG Capital Management, will contribute to its unit's reorganization. The reorganization plan envisions splitting the bankrupt unit into an operating company and a real estate investment trust. Creditors have accused the parent of stripping the operating unit of its best hotel and casino assets prior to a $18 billion bankruptcy filing in January 2015 and are demanding compensation. Caesars has denied the allegations. A court-appointed examiner found in March that Caesars could be on the hook for between $3.6 billion and $5.1 billion for pre-bankruptcy transactions.

The official keeping an eye on the professional fee meter in the Caesars Entertainment Operating Co. bankruptcy says the recent hourly rate increases at various law firms working on the case — some of which brought top rates close to the $1,500-per-hour mark — deserve a deeper dive, the Wall Street Journal reported on Saturday. Nancy Rapoport, a law professor and independent member of the committee monitoring professionals’ fees, says that the four-figure rates themselves aren’t necessarily the issue. Rather, “the controlling issue here is whether the clients of those firms are paying those rates,” she wrote, requesting evidence that a firm’s bankruptcy and non-bankruptcy clients alike each pay those rates — i.e., that there is no bankruptcy premium. Rapoport’s remarks came in conjunction with the fee committee’s review of the third round of fee applications in Caesars Entertainment’s chapter 11 case, filed in court this week. She said that the latest bills in the casino company’s $18 billion restructuring “triggered fewer areas of concern” than prior bills but still required some fee reductions tied to staffing and expenses like travel, hotels and meals.

Caesars Entertainment Corp. and its bankrupt operating unit have offered an olive branch to a group of bondholders in a bid to move the unit’s chapter 11 restructuring forward, the Wall Street Journal reported today. Caesars Entertainment Operating Co. says that it and its publicly traded parent, which isn’t in bankruptcy, have offered 85 cents on the dollar to the holders of $502 million in bond debt guaranteed by the CEOC unit’s subsidiaries, the casino companies said yesterday. The settlement offer, which isn’t binding and is subject to further negotiation, would settle a skirmish between the bondholder group and CEOC’s senior creditors. The settlement offer comes as CEOC works to achieve broad creditor support for its $18 billion restructuring, which has been marked by numerous creditor battles.