U.S. Judge Says Apollo, TPG Should Fund Caesars Bankruptcy Plan

by San Antonio Attorney

A United States judge advised the casino operator of Caesars Entertainment Corp (CEC) to get funds from the parent company’s private equity sponsors to finance the bankruptcy exit plan.

The Caesars casino parent company was created by TPG Capital Management LP and Apollo Global Management LLC in a 2008 takeover and the three firms are being accused of asset stripping and fraud by the bankrupt unit’s creditors.

The three companies have denied the allegations of creditors.

Caesars Entertainment Operating Co. sought for Chapter 11 bankruptcy protection in 2015 and has a restructuring proposal that it says depends on a $4 billion funding from its parent company, to resolve claims of creditors that it plundered the assets of the casino and hotel unit before declaring bankruptcy.

But according to U.S. Bankruptcy Judge Benjamin Goldgar, the reorganization plan was unfair to creditors because it did not consider obtaining asking funds from the private equity groups. Why the bankruptcy plan should exclusively rely on CEC’s contribution was an issue for Goldgar.

Recently, the unit filed a request to extend a suspension on billions of dollars in claims over company debt guarantees from many bondholders filed against the parent as it tries to reconcile with creditors who are holding out.

The bankrupt unit’s attorneys have argued that suing the parent company could endanger the financial support for the reorganization plan and drive it into bankruptcy too.

A court trial to determine whether the lawsuits against the parent will be halted is slated on Aug. 23.  In CEC’s recent court filing, the company said it had reached a settlement deal with one of the four lawsuits filed by bondholders.

If Caesars’ bankruptcy plan is approved, it would discharge claims filed against the private equity sponsors along with their directors.

The parent company of Caesars would also be release because it is part of the present reorganization plan.

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