Hedge Funds Lose Hand In Caesars’ Bankruptcy Battle
Caesars Entertainment (CZR) received a temporary reprieve on Wednesday from bondholder lawsuits seeking up to $11.4 billion after a U.S. bankruptcy judge in Chicago decided to halt proceedings in other courts until Aug. 29.
Caesars has said it could be forced into bankruptcy alongside its operating unit if courts rule in favor of the hedge fund bondholders suing the casino group in New York and Delaware courts.
The lawsuits allege the parent reneged on guarantees from bonds issued by its unit, which filed for bankruptcy in January 2015. Caesars denies the allegations.
Lawyers for Caesars Entertainment Operating Corp., the bankrupt operating unit known as CEOC, said negative judgements against its parent would jeopardize its reorganization plan.
(For more on the Caesars bankruptcy battle read Fortune’s feature, A Private Equity Gamble Gone Wrong.)
CEOC is trying to negotiate a settlement with creditors that is currently based on a $4 billion contribution from its parent but creditors across its capital structure have not supported the plan.
“There better be some talking and it better be fast,” Judge Benjamin Goldgar said on Wednesday.
He said the chances of Caesars obtaining further injunctive relief past Aug. 29 were “small.”
Shares of Caesars jumped 8.7% to $8.54 on the Nasdaq.