Caesars Entertainment Corporation’s attorneys are preparing their final briefs after two weeks in bankruptcy court at the Dirksen Federal Building in Chicago.
A group of creditors testified in court that they forced Caesars’ operating unit, a subsidiary of CEC, into bankruptcy on January 12, when Caesars missed a deadline for an interest payment.
Caesars claims they did not actually miss the payment, and instead filed for voluntary Chapter 11 bankruptcy three days later. The case hinges on which date Judge A. Benjamin Goldgar interprets Caesars’ Chapter 11 bankruptcy case began.
If he determines the case did not begin until Caesars filed voluntarily, the company will be immune from paying bondholders the $468 million they’re seeking while the company is in bankruptcy.
CEC lawyers claimed bondholders jumped the gun in trying to force Caesars into bankruptcy by not allowing the company its mandatory 30-day grace period to pay after a missed interest payment.
Bondholders attempted to prove that Caesars had a history of missing deadlines for payments, so they were justified in seeking their interest payment on January 12.
Junior bondholders are not on board with Caesars’ reorganization plan, which was approved by its bank lenders and secured creditors. Caesar’s plan would cut their current $20 million debt nearly in half, and abandon much of the debt owed to unsecured creditors and bondholders.
Caesars’ parent company, Caesars Entertainment Corporation, is not bankrupt yet, but could be forced into bankruptcy if it loses this case against its bondholders.
CEC failed to get unanimous approval for the plan from bondholders before filing for voluntary bankruptcy and enacting its reorganization plan, which junior bondholders argue violates the 1939 Trust Indenture Act.
Judge Goldgar warned after the first day of trial that this case was not likely be be settled quickly, and stood by that claim after two weeks in court. He will hear the court’s final briefs on November 20, and hopes to arrive at a decision by January 20.
