Bondholders Vs Caesars Entertainment: Taking It to Trial

by San Antonio Attorney

The legal representatives for Caesars Entertainment Corporation’s attorneys are gradually preparing for their final briefs after two weeks in bankruptcy court at the Dirksen Federal Building, located in Chicago.

The creditors forced Caesars’ operating unit, a subsidiary of CEC, into bankruptcy last January 12. This occurred when Caesars missed a deadline for an interest payment, according to a testimony in court.

CEC clarified that they did not actually miss the payment but filed for voluntary Chapter 11 bankruptcy instead. This filing for bankruptcy occurred about three days from the said missed deadline of payment. The case will depend entirely on which date Judge Benjamin Goldgar interpreted Caesars’ Chapter 11 bankruptcy case.

Should Judge Goldgar rule out that the case did not begin until Caesars filed voluntarily, they will be spared from paying bondholders the $468 million debt due to bankruptcy case.

CEC’s legal representative claimed that bondholders forced Caesars into bankruptcy by withholding the mandatory 30-day grace period to pay after a failed interest payment.

In defense, bondholders proved that Caesars had a history of unable to pay missed deadlines and any action they did was justifiable in seeking their interest payment on January 12.

Junior bondholders also did not agree with Caesars’ reorganization plan. This plan was already approved by its bank lenders and creditors. The modified plan will split their current $20 million debt in half and the remaining debt of unsecured creditors and bondholders will be abandoned.

CEC did not get a unanimous approval for the proposal from the bondholders. They immediately filed for voluntary bankruptcy and enabled their reorganization plan. Junior bondholders emphasized that CEC violates the 1939 Trust Indenture Act.

Judge Goldgar will hear the court’s final briefs this coming November 20 and a final decision will be dropped by January 20.

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