Caesars Entertainment Corp asked for an extension on the injunction to shield its operating unit from litigation following a Chapter 11 filing in a Chicago court last year, according to reports.
The current injunction will expire Monday. A new ruling is expected over the weekend.
However, Chicago US Bankruptcy Court Judge A. Benjamin Goldgar expressed reservations during the closing arguments about the efficiency of a litigation shield in moving settlement talks forward.
Caesars the parent firm is not in bankruptcy. But its operating unit Caesars Entertainment Operating Co., or CEOC, is. CEOC is deep in $18 billion debt after it’s a leveraged buyout by two private equity firms. The company is said to be in the red because shareholders moved assets from the firm to other entities. Bondholders are suing for $11 billion in damages in New York, Delaware, and Chicago courts.
“There’s nothing about another injunction that would be equitable or fair,” Jones Day lawyer Jim Johnston said. He represents bondholder complainant Wilmington Savings Fund Society. Further, bondholders said that proceeding with the litigation will allow them to move towards arriving at a settlement, which the shield precluded.
Analysts say that the greatest obstacle to the conclusion of the Chapter 11 case gas been getting unanimous creditor support for a wide ranging deal that will settle claims against Caesars, the parent firm, and its private equity partners.