The golden days for Caesars Entertainment are already behind the corporation, but a ruling made by Bankruptcy Judge Benjamin Goldgar may have just pushed them even further away.
This week, Goldgar refused to protect Caesars from nearly $11 billion in lawsuits by hedge fund creditors who are owed billions by Caesars Entertainment Operating Co. The operating unit filed for Chapter 11 bankruptcy in January of this year.
The operating unit and casino group is $18 billion in debt, and each lawsuit will have judgements issued in the coming weeks. If the courts side with the creditors, Caesars Entertainment could also be forced into bankruptcy.
As Goldgar announced his decision, shares of Caesars fell more than 50-percent.
Caesars has offered the creditors hundreds of millions of dollars to withdraw their litigation and support the $1.5 billion the company has pledged to restructuring the operating unit – a last ditch effort to save the parent company.
The lawsuit could also mean big things for a variety of investors who have, at various times, snatched up the debt of the now-bankrupt operating unit – including Blackstone Group LP, Elliott Management Corp., and Appaloosa Management LP.
Before declaring bankruptcy on Jan. 15, more than 45 deals were attempted to keep the casino empire afloat. It struggled after a buyout in 2008 coincided with the financial crisis and has posted losses for the last four years, with total liabilities topping $28 billion.
The bankruptcy filings included most of the Caesars Palace Las Vegas and two casinos in Atlantic City, N.J. Some of Caesars’ Vegas properties and the Playboy Club London were not involved. Even after the bankruptcy, entertainment offerings at these venues – such as Britney Spears’ longstanding residency – were not affected.
The operating unit manages 38 gambling properties and employs about 32,000 people.
(Photo credit: Alexis Fam, Creative Commons.)
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