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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.

The operating unit of Caesars Entertainment Corp, the largest U.S. casino company, filed for chapter 11 protection to implement its plan to cut $10 billion of debt, Reuters reported today. The company said it has the support of its senior noteholders to implement the plan, which will reduce the operating unit's debt to $8.6 billion from $18.4 billion. The bankruptcy protection was filed by Caesars Entertainment Operating Company Inc. and several affiliates in the U.S. Bankruptcy Court for the Northern District of Illinois. They listed assets and liabilities of over $1 billion, according to the filing. Much of the debt is a legacy of the $30 billion leveraged buyout of Harrah's Entertainment that was led by Apollo Global Management and TPG Capital in 2008. Under the plan, the operating unit will be split into a casino company and a publicly traded real estate investment trust.

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.

Junior creditors of Caesars Entertainment Corp. moved to force the main operating unit into bankruptcy in an attempt to block a plan to protect senior lenders at their expense, after contentious wrangling over the casino company’s future, Bloomberg News reported today. The involuntary chapter 11 filing today by Appaloosa Investment LP and other junior lenders in Delaware pre-empts Caesars’ own effort to put the unit under bankruptcy court protection and threatens to scuttle a deal between the company and senior creditors. Appaloosa asked the court to appoint an examiner to investigate claims that insiders “plundered” the unit, paying themselves hundreds of millions of dollars while moving assets out of the junior creditors’ reach. The filing by Appaloosa and other holders of second-priority senior secured notes in the unit follows months of negotiation and litigation between Las Vegas-bases Caesars and its creditors.
http://www.bloomberg.com/news/print/2015-01-12/appaloosa-files-to-put-c…

In related news, bondholders of Caesars Entertainment Corp. will continue their fraud lawsuit against the casino company controlled by Apollo Global Management LLC (APO) even after its operating unit’s planned bankruptcy filing around Jan. 15, Bloomberg News reported on Friday. Caesars was asking the judge to toss the lawsuit, saying that bankrupt companies are automatically protected from litigation. The bondholders, who accused Caesars and its directors from Apollo of “looting” assets from the insolvent unit that owes them money, said their claims against those parties aren’t affected by the rule. The Las Vegas-based company has made agreements with a few lenders to try to use bankruptcy court to cut about $10 billion of debt from the money-losing unit that runs the casinos by offering them fees and special payments, filings show. Those who sign up must agree to drop out of lawsuits, Caesars says in regulatory filings.
http://www.bloomberg.com/news/print/2015-01-09/caesars-bondholders-to-c…

Caesars Entertainment Corp. won more support for a plan to put its biggest unit into bankruptcy as soon as next week after a bondholder group that’s already on board with the restructuring bought $500 million of debt from BlackRock Inc., Bloomberg News reported today. Caesars, owned by Apollo Global Management LLC and TPG Capital, has been negotiating with creditors for four months on a plan to reorganize Caesars Entertainment Operating Co., the subsidiary that owns most of its casinos. Its proposal would restructure $18.4 billion of debt by putting the unit into bankruptcy as soon as Jan. 15 and turning it into a real estate investment trust.

A group of Caesars Entertainment Corp.’s senior bondholders is holding out for more money, threatening to make it difficult for the casino owner to obtain enough creditor votes to make its bankruptcy plan a reality, Bloomberg News reported yesterday. Investors who say they own $1.6 billion in Caesars first-lien notes hired law firm Debevoise & Plimpton LLP to negotiate for better terms, said My Chi To, a partner at the New York-based firm. Caesars has five days before a deadline to win more support from bondholders for a restructuring agreement it struck with some creditors last month. The agreement with investors including Elliott Management Corp. and Pacific Investment Management Co. requires the company to sign at least 60 percent — or $3.8 billion — of first-lien bondholders by Jan. 12 onto its plan to restructure Caesars Entertainment Operating Co. To win court approval for a related bankruptcy reorganization proposal, Caesars would need support from creditors holding at least two-thirds of the bonds.

Through a series of financial maneuvers, Apollo has positioned itself to salvage some of the $1.7 billion it invested in Caesars, which it took private seven years ago in a $28 billion leveraged buyout with fellow private-equity firm TPG, the Wall Street Journal reported today. The restructuring hinges on the bankruptcy of Caesars’s largest unit, which could come as soon as mid-January, and transfers of the unit’s best assets that have infuriated creditors. Apollo has engineered transfers of some of the casino chain’s most valuable properties — including a key piece of the Las Vegas Strip’s Caesars Palace — from the soon-to-be-bankrupt Caesars Entertainment Operating Co. to other Caesars affiliates. That left holders of $18.4 billion in debt owed by Caesars Entertainment Operating Co. with claims on far fewer assets. As a result, some creditors are being asked to take less than what they are owed in negotiations leading up to the unit’s chapter 11 filing, while Apollo would retain a significant interest in the gambling empire. Though its stake is currently worth only around 40 percent of what Apollo invested, according to regulatory filings, it positions the private-equity firm to share in the upside if Caesars thrives.

Revel AC Inc. won bankruptcy court approval to sell its shuttered Atlantic City, N.J., casino to the original bidder for $95.4 million, after an earlier sale at a higher price fell apart, Bloomberg News reported yesterday. Bankruptcy Judge Gloria Burns said that she will enter an order authorizing the sale to Florida real estate investor Glenn Straub’s Polo North Country Club Inc. The company and Straub will have 30 days to close the deal once the order is entered. Revel was one of four casinos that closed last year after New Jersey’s gambling center saw its dominance fade amid growing competition from game rooms in neighboring states. Casino revenue in Atlantic City fell more than 40 percent to about $2.8 billion in 2013 from a peak of more than $5 billion in 2006. The company received court approval to scrap a $110 million sale to Brookfield Property Partners LP, the winner at auction. Brookfield walked away from the deal because it couldn’t arrange a cut in its electric bill. The casino owner turned to Straub, who came in second at the auction with a final offer of $95.4 million. The backup plan may not pan out either, as Straub has sought to lower the price.

Bankruptcy Judge Gloria Burns said yesterday that she would approve a $26 million settlement between Atlantic City and the Revel Casino Hotel that will provide much-needed cash for New Jersey's struggling gambling hub and a tax cut for the shuttered gambling complex, Reuters reported yesterday. Judge Burns also indicated she would approve a request to increase the size of Revel's bankruptcy loan from Wells Fargo to $61 million to pay for the tax settlement. The settlement cut Revel's tax bill by $7 million, and in return the casino agreed to drop its legal fight to reduce its property taxes. The defunct casino, which closed in September, owed the city approximately $33 million in taxes, interest and penalties. Tax collectors failed to garner any bids at an auction of the casino's tax debt earlier in December, setting the stage for negotiations to reduce the casino's tax bill.

Caesars Entertainment Corp. said yesterday that more than 39 percent of senior bondholders backed a restructuring plan, bringing it closer to a key level of creditor support, and it released details of how the reorganized casino company will operate, Reuters reported yesterday. Caesars detailed lease agreements for Caesars Palace Las Vegas and other properties and new debt issuance for its operating unit, which it plans to put into bankruptcy next month and then split into a casino operator and property company. Caesars has said that filing for bankruptcy will reduce its debt to $8.6 billion from $18.4 billion for its operating unit, which runs 44 casinos in 13 states. Caesars said in a securities filing yesterday that the restructuring will include two separate leases: one for Caesars Palace Las Vegas and a separate lease for certain other Caesars properties. The Caesars Palace Las Vegas lease includes a base rent of $160 million for the first five years, while the base rent for the other properties will be $475 million for the first three years.