Caesars Entertainment Corp’s operating unit will file for bankruptcy on Thursday in Chicago to carry out a $10 billion debt-cutting plan, according to a court filing by the largest U.S. casino company.
Some creditors of the operating unit, which runs 44 casinos, have filed an involuntary bankruptcy petition in Delaware this week. They asked the Delaware court to put on hold any voluntary bankruptcy filing, which had been expected since last month, although the date and the location of the filing were unknown.
The parent company will not be part of the operating company’s bankruptcy. Shares of Caesars Entertainment (CZR) were down sharply on the news.
Caesar’s has a plan to cut the operating unit’s debt to $8.6 billion from $18.4 billion. Senior noteholders support the plan but junior noteholders, including some hedge funds, oppose it. They would end up with a dime for each dollar of debt owed.
The junior creditors filed their involuntary petition on Monday at the U.S. Bankruptcy Court in Wilmington, Delaware. They asked the Delaware court to decide the proper venue for a bankruptcy case and to issue an order putting on hold any subsequent voluntary filing outside of Delaware.
Caesars urged the Delaware court to reject that request. It said the operating unit’s “counsel and senior management, along with various other stakeholders, are in (or in transit to) Chicago preparing for the voluntary filing and continuing negotiations.”
Caesars and its junior noteholders, which include huge hedge funds, have been waging a legal battle through various courts over the company’s plan to cut its operating unit’s debt.
The junior noteholders allege that choice properties were moved out of the operating unit and put beyond their reach. The operating unit has said capital-intensive assets were transferred out to free up cash.