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A judge has rejected an unusual attempt by junior bondholders of Caesars Entertainment's bankrupt operating unit to disqualify law firm Kirkland & Ellis from leading the casino group's $18 billion chapter 11 restructuring, Reuters reported yesterday. Jones Day, the junior bondholders' law firm, had asked the court to reconsider a May order that allowed the bankrupt unit of Caesars Entertainment Corp. to hire Kirkland’s James Sprayregen. The fresh motion in the contentious bankruptcy case accused Sprayregen of giving misleading court testimony earlier this year regarding pre-bankruptcy work Kirkland handled for Caesars. Jones said that it unearthed new evidence including minutes from a 2014 board meeting. Jones Day's heavily redacted filing did not disclose the meeting minutes. In his denial to consider the motion at a Nov. 18 hearing, Bankruptcy Judge Benjamin Goldgar said Jones Day should have requested court permission before filing such a restricted document. He said they could ask to refile the motion.

Caesars Entertainment Corp.’s bankrupt operating group said in a court filing that it has cancelled the auction of property at its failed Harrah's Tunica Casino in Mississippi amid a lack of bidders, Reuters reported today. Casino operator Caesars Entertainment Operating Co., which filed for chapter 11 in January with $18 billion of debt, had been trying to sell Tunica for two years before closing its doors amid a slump in gambling and tough local competition. Caesars said that it would ask Bankruptcy Judge Benjamin Goldgar to approve the sale of Tunica to stalking-horse bidder TJM Properties Inc, a Florida real estate investment firm that develops senior living facilities, at a Nov. 2 hearing. TJM has offered $3 million cash for the leftover property at Tunica.

Potential bidders for CEOC, a casino-operating unit of Caesars Entertainment would be wading into the middle of a costly and complicated bankruptcy, and they note that Caesars has left key assets — including a crucial piece of its big-data customer loyalty program — out of the package, according to a Reuters commentary yesterday. Analysts and some junior creditors have suggested that Caesars isn't serious about selling its CEOC operating unit and expressed doubt that the offering will attract any bidders. In court documents, the operating unit itself noted that the bidding process "may not result in any offers" and that if there is a successful bid "there is no guarantee that the transaction will close." One major factor behind buyers' skepticism about Caesars' proposed sale, designed to test CEOC's value under a plan to emerge from its $18 billion bankruptcy, is that the operating unit lacks clear control of its Total Rewards loyalty program, analysts and industry players said. The program manages sought-after information on its 45 million members' spending habits, and it instantly adds value to any casino brought into the program. Under a complex operating structure, CEOC owns Total Rewards. But a separate, non-bankrupt unit called Caesars Enterprise Services controls the licensing agreement that channels business between casinos putting that piece of the program out of reach of bidders for the casino operating unit. Read more. 

For further analysis of valuation in bankruptcy, be sure to pick up a copy of ABI’s A Practical Guide to Bankruptcy Valuation. 

Junior bondholders in the Caesars Entertainment casino bankruptcy accused restructuring attorneys of allegedly misleading a judge and said that they should be disqualified from handling parts of the case, Reuters reported yesterday. The allegation adds to the bitterness of the $18 billion bankruptcy, which has pitted the private-equity owners of Caesars Entertainment Corp. against the junior creditors of the company's operating unit. In a Wednesday court filing, junior creditors said that they had unearthed evidence that they said showed that attorneys with Kirkland & Ellis, which represents the bankrupt operating unit CEOC, misled the court about potential conflicts. The junior creditors are represented by a team of lawyers from Jones Day, and they asked Bankruptcy Judge Benjamin Goldgar to address the matter at a hearing on Nov. 18. Judge Goldgar has already approved the hiring of Kirkland over a previous objection by junior creditors. Goldgar could decline to revisit the issue, or consider the request to disqualify some of Kirkland's retention.

Caesars Entertainment's bankrupt operating unit can keep exclusive control over its bankruptcy until March 15, Bankruptcy Judge Benjamin Goldgar ruled yesterday, giving the casino group its second extension for filing for chapter 11 protection in January, Reuters reported today. The casino operating unit, CEOC, presented a new bankruptcy reorganization plan earlier this month that has the support of creditors holding $12 billion of debt, amounting to about two thirds of the total $18 billion debt pile. The exclusivity was due to expire on Nov. 15, but CEOC asked for another four months to persuade junior bondholders to agree to the plan, which splits its business into an operating company and a real estate investment trust.

Tim Blixseth, the former billionaire and founder of the luxurious Yellowstone Club ski and golf resort in Montana, was sent back to jail Oct. 19 after a U.S. district judge said that he was unsatisfied that Blixseth hadn't come clean on the $13.8 million that he received from the sale of a Mexican resort, the Associated Press reported yesterday. Blixseth was tossed into a Great Falls, Mont., jail in April after a judge found the developer in contempt for failing to account for the millions he owes creditors. Prosecutors said that Blixseth owes more than $250 million to his lenders. Blixseth sat silently in court on Monday as his accountant took nearly six hours to explain Blixseth's sale of a Mexican resort, with funds funneling through more than 20 different businesses and/or bank accounts. The accountant insisted that all of the $13.8 million has been spent. U.S. District Judge Sam Haddon ordered Blixseth back to jail until at least Nov. 20, when he's expected to rule on whether Blixseth had provided sufficient detail on the Mexican funds.

Wilmington Trust, a representative for noteholders of Caesars Entertainment Corp.’s (CEC) bankrupt unit, has sued the casino operator for avoiding its written guarantee on repayment of more than $51 million of interest on the unit's debt, Reuters reported today. The lawsuit alleges that Caesars has not paid interest on 10.75 percent notes due 2016 issued by its unit Caesars Entertainment Operating Co. (CEOC), which filed for bankruptcy in January. The lawsuit filed by White & Case LLP today alleges that Caesars violated the U.S. Trust Indenture Act by voiding its guarantee of the operating unit's obligations. Wilmington Trust, which alleged that notes of about $479 million plus interest remain outstanding, said CEC had guaranteed payment of all principal and interest on the notes as and when due.

Club One, a popular downtown Fresno, Calif., casino and restaurant, has filed for bankruptcy, the Fresno Bee reported today. The chapter 11 filing was made on Wednesday by its ownership group, led by Kyle Kirkland, Club One Casino Inc.’s president, who says that the lucrative casino will stay open and continue to pay fees it owes the city. The bankruptcy filing comes after a ruling last week in New York favoring two Fresno residents, former owner Elaine Long and minority owner George Sarantos, who are the casino’s biggest creditors after a 2008 sale. In total, Long and Sarantos are owed nearly $12 million combined, their lawyers said.

The owners of Sinbad’s Restaurant at Pier 2 in San Francisco have filed for bankruptcy ahead of Wednesday’s planned eviction, according to Port of San Francisco officials, the San Francisco Chronicle reported today. The longtime waterfront restaurant had previously agreed to vacate its site on The Embarcadero in March to make way for a new $65 million ferry terminal, but the owners instead sued to remain at the pier until next year. A jury ruled in July that Sinbad’s could no longer occupy the premises, and a judge gave the restaurant until the end of September to remove its property.