LAS VEGAS—Caesars Entertainment Corp. on Thursday put its largest operating unit, Caesars Entertainment Operating Co., into voluntary Chapter 11 bankruptcy. The filing by CEOC at US Bankruptcy Court in Chicago is meeting opposition from junior creditors, who earlier this week filed an involuntary Chapter 11 petition for the casino operator.

The parent company, which is not included in the bankruptcy filing, is using Chapter 11 to restructure about $18.4 billion of debt and to convert CEOC into an OpCo and a newly formed PropCo that would trade publicly as a REIT. “We believe this restructuring is in the best interests of all of CEOC's stakeholders and will result in a sustainable capital structure for CEOC and value creation for all stakeholders,” says Gary Loveman, CEOC's chairman.

CEOC's second-lien debt holders, however, see the matter differently. This past Monday, a group led by Appaloosa Investment LP filed in US Bankruptcy Court in Delaware to block the restructuring plan, alleging that the parent company had “plundered” CEOC while moving its assets out of the reach of second-lien debt holders.

Subsequently, Bloomberg reported Thursday, the creditors have sought to persuade US bankruptcy judge Kevin Gross in Delaware to temporarily halt any forward movement on the Chicago case. Gross is also being asked to decide which jurisdiction should hear both cases, Bloomberg reported.

One issue as the junior creditors see it is the move by Apollo Global Management and TPG Capital, which acquired Caesars in 2008, to preserve their $1.8-billion stake, while the bankruptcy filing would wipe out nearly $10 billion in claims. “There are going to be a lot of creditors with a lot of incentive to push back very hard on this attempt to basically retain the equity for this company,” Michael Friedman, a partner at Chapman & Cutler LLP, told Bloomberg Thursday. In the meantime, it's business as usual at all Caesars properties.

Instant Insights /

Caesars Puts Operating Unit into Chapter 11

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