Caesars Entertainment Deals with Creditors and Private Equity Firms Clash

by San Antonio Attorney

Caesars Entertainment, which sought for bankruptcy protection in January 2015, filed a motion to prevent a group of creditors who wanted to sue the casino’s parent company.

The casino operating division is making efforts to leave bankruptcy through a complex deal that may fail because of the company’s value.

According to experts, there seems to be a problem with regards to splitting up the parts of the company that operates under various brand names in different countries.

Burdened with $18 billion debt, the casino operating unit of Caesars Entertainment filed for Chapter 11 bankruptcy in a Pennsylvania court last year.  Nearly one-half of the company is now owned by private equity firms TPG Capital and Apollo Global Management and Paulson & Co.

Caesars Entertainment attempted to remove the casino unit from bankruptcy by offering $4 billion to creditors, but was rejected because a group of creditors wanted $12 billion for the unit.  In addition, those creditors have claimed that the private equity firms have been swooping on the most profitable assets for their own benefits before the bankruptcy filing.  Caesars, which is a publicly traded company, has a market value of $1.2 billion.

Hedge fund bondholders are filing lawsuits against the company’s casino operating unit faces in New York and Delaware.  Caesars Entertainment has refused to admit the allegations.  The conflict puts the entire process at risk of failing and getting back to where it started.

Chapter 11 bankruptcy is often the last resort for a company that is struggling financially.  Caesars Entertainment has been in trouble since a takeover by private equity firms in 2008, which was the time when the United States was in deep economic crisis.

The casinos operated by the company in different cities, such as Atlantic City and Las Vegas, are still open for business.

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