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Elliott Management Corp. has been adding to derivatives trades that would pay off if Caesars Entertainment Corp. defaults as the hedge fund helps orchestrate a bankruptcy plan for the casino operator’s biggest unit, Bloomberg News reported yesterday. The hedge fund, run by billionaire Paul Singer, one of Caesars’s biggest bondholders, bought credit-default swaps before entering negotiations with Caesars in September and has continued to purchase the derivatives. Caesars, the most-indebted U.S. gambling operator, is attempting to reorganize $18.4 billion of borrowings after losing money every year since 2009. The Las Vegas-based company said in August that creditors that also own swaps were trying to push it into default. The swaps transactions may explain why Caesars’s discussions with its creditors have focused on a potential Jan. 14 bankruptcy filing when the company says it has enough cash to meet its debt obligations through next year.

Creditors of GT Advanced Technologies complained in a bankruptcy court filing that the sapphire company may have gotten too little in its proposed settlement with Apple Inc. over legal claims stemming from a deal to supply sapphire screens, Reuters reported yesterday. GT Advanced's chief operating officer has said in court papers that the iPhone maker pulled a "bait and switch" to force the sapphire maker into a money-losing deal in 2013. GT Advanced shocked investors by filing for bankruptcy in October in a case that was initially shrouded in secrecy due to a confidentiality agreements with Apple. After the bankruptcy filing, Apple agreed to release GT Advanced from the deal and allow it to sell more than 2,000 sapphire furnaces located in Mesa, Arizona. The agreement needs approval by U.S. Bankruptcy Court Judge Henry Boroff, who has been hearing the chapter 11 case in Springfield, Mass.

Unsecured creditors are balking at Trump Entertainment Resorts Inc.’s proposed bankruptcy exit plan, calling it a “charade” and a power play by Carl Icahn to preserve hundreds of millions of dollars in tax credits for his benefit, the Wall Street Journal reported today. Unlike most bankruptcy plans that look to secure votes from a variety of creditors, Trump Entertainment has said that the only vote that matters is that of Icahn, the billionaire activist investor who controls the secured debt of the Atlantic City, N.J., boardwalk gambling operation. A hearing is scheduled to take place tomorrow to win a court’s approval for the voting scheme. The chapter 11 plan calls for Icahn’s companies to swap out some of their Trump Entertainment debt for a controlling equity stake in a reorganized company as well as for new debt. Additionally, Icahn’s affiliates will invest $100 million to get the ailing gambling operation on its feet, court papers say.

Bankrupt power company Energy Future Holdings Corp. received conditional court approval to accept bids for its majority stake in Oncor, a power transmission company in Texas worth billions of dollars, Reuters reported yesterday. Bankruptcy Judge Christopher Sontchi said yesterday that Energy Future could begin accepting bids once it had changed the way affiliates approved of the plan to sell Oncor. He also said that the bidding process must involve the two official creditors committees and the time frame for the sale should be extended. "The immense size of this case and $18 billion asset is certainly unusual and the involvement of public companies as bidders is a complicating factor,” Judge Sontchi said. “But there is no reason to depart from established practices that have developed for selling an asset in bankruptcy.” Creditors had objected to the proposed process because it involved sealed bids to choose a stalking-horse bidder. Once the stalking horse was chosen, Energy Future planned to have an open auction when all bids could be reviewed by participants. Judge Sontchi said that Energy Future would have to allow the participation of the two official creditors committees in the selection of a stalking horse bidder. The company originally set a deadline for final bids for the role of stalking horse on Nov. 21, which Sontchi said would have to be extended.

Ahead of a key hearing this week in the Trump Entertainment Resorts Inc. bankruptcy, unsecured creditors blasted the company's disclosure statement for its chapter 11 reorganization plan as a "charade" that should not be approved by the judge, Philly.com reported on Saturday. The creditors said that the plan is designed for the "sole purpose of preserving hundreds of million of dollars in tax attributes for the exclusive benefit of [Carl] Icahn," who has a $292 million secured claim on Trump assets. Under the plan, affiliates of Icahn would trade $292 million in debt for 55 percent of the stock in the company and a $100 million note that would not require cash interest payments. Instead, the amount owed to Icahn would increase over five years, according to bankruptcy court filings. Icahn — who lost a battle for ownership of Trump Entertainment in 2010 bankruptcy — would obtain the remaining 45 percent of the company's equity in exchange for a $100 million investment. But Icahn will only make that $100 million investment if state and local governments agree to provide $175 million in aid over the next five years, including $55 million immediately after the company emerges from bankruptcy, according to the plan.

Exide Technologies' unsecured creditors say they have lost confidence in the company's management to guide the battery maker safely through bankruptcy, Dow Jones Daily Bankruptcy Review reported today. The company’s unsecured creditors’ committee at a hearing yesterday asked a judge to help them get information about plans to sell the company, which has been struggling in chapter 11 since June 2013. The panel says that it suspects Exide is being steered into a sale that will put the company into the hands of senior lenders, leaving most creditors out in the cold.

The Delaware Supreme Court said on Friday that creditors are entitled to rely on formal loan documents authorized by secured lenders, even if there is a mistake in the documents, Reuters reported on Saturday. The court was responding to a question from a New York federal appeals court relating to a dispute between creditors of General Motors before its 2009 bankruptcy and its former lender, JPMorgan Chase & Co. The issue relates to GM's insolvency, in which its healthy assets were sold to the new General Motors Co, while the rest were liquidated for the benefit of unsecured creditors. GM's unsecured creditors' committee claimed that JPMorgan and other holders of a syndicated $1.5 billion term loan extinguished their lien on GM's assets, freeing up the assets to unsecured creditors. JPMorgan said neither it nor GM intended to nix the lien. "Parties in commerce are entitled to rely upon a filing authorized by a secured lender and assume that the secured lender intends the plain consequences of its filing," the court said in its opinion.

Energy Future Holdings squared off against creditors in court on Friday as the bankrupt Texas power company sought approval to begin a multibillion dollar auction of its interest in Oncor, a power transmission business, Reuters reported on Friday. The company anticipates an auction in February, and sources told Reuters that potential bidders include NextEra Energy Inc. of Juno Beach, Fla., Hunt Consolidated Inc. of Dallas and Houston-based Centerpoint Energy Inc. Energy Future is not selling Oncor, but the right to own an 80 percent stake in Oncor, which operates the largest network of power lines in Texas and is closely watched by regulators. Creditors opposed the structure of the proposed auction because they said that it would lock the company into a reorganization that would provide billions of dollars of tax benefits for one group of senior lenders.

The team winding down Lehman Brothers Holdings Inc. is accusing some of the nation's financial institutions of trying to freeze billions of dollars of Lehman cash earmarked for other creditors to "coerce" a favorable settlement in their fight with the failed investment bank over soured mortgage loans, Dow Jones Daily Bankruptcy Review reported today. In a bankruptcy court filing on Wednesday, lawyers for Lehman blasted the trustees responsible for some 255 individual residential mortgage-backed securities trusts that purchased mortgage loans from Lehman before the financial crisis. The trusts have said that Lehman needs to set aside $12.14 billion to settle claims over certain soured mortgage loans, more than double the amount that the failed investment bank has put aside for the dispute.

A bankruptcy judge said yesterday that Energy Future Holdings Corp. doesn't have to name names of the contenders as it searches for a lead bidder to open an auction for rights to its valuable Oncor stake, Dow Jones Daily Bankruptcy Review reported today. The ruling from Bankruptcy Judge Christopher Sontchi means that unhappy creditors won't get a peek behind the curtains of a process that they say could cost them billions of dollars. "The identity of bidders and bid details are off the table" as creditors question company officials in advance of an Oct. 17 court session where Energy Future will seek approval on rules for the auction, Judge Sontchi said at a hearing yesterday.