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Howard Stutz

Creditors attempting to block Caesars planned restructuring

12 January 2015

Junior level creditors of Caesars Entertainment Corp. are attempting to block this week’s planned restructuring of the casino company’s primary business unit.

The lenders, led by Appaloosa Investment LP, filed an involuntary Chapter 11 bankruptcy against Caesars Entertainment Operating Co. on Monday in Delaware. The move is an attempt to stop a restructuring deal between Caesars and its senior creditors.

Last week, Caesars announced 60 percent support for a plan that would put CEOC into Chapter 11 bankruptcy protection voluntarily and turn it into a real estate investment trust. The move would eliminate almost $10 billion of the business unit’s $18.4 billion of debt.

According to Bloomberg News, Appaloosa asked the court to appoint an examiner to investigate claims that insiders “plundered” the unit, paying themselves hundreds of millions of dollars while moving assets out of the junior creditors’ reach.

Appaloosa said second-lien noteholders would never receive a $225 million interest payment that was skipped last month under the Caesars plan.

In an emailed statement, Caesars Entertainment called Monday’s filing “meritless” and a “transparent attempt to thwart” the restructuring. Caesars said more than two-thirds of CEOC’s first-lien noteholders have agreed to the company’s plan.

“The action is designed to injure CEOC while these junior creditors attempt to boost their standing,” the company said. “CEOC plans to proceed toward the implementation of the previously announced restructuring agreement.”