Caesars heading for critical bankruptcy hearing

Caesars heading for critical bankruptcy hearing

Friday, January 6, 2017
A reported $300m has been spent on legal fees since 2015

At long last it appears that Caesars Entertainment Corporation's (CEC) debt battles may finally be reaching a conclusion as the company heads for a critical Chicago bankruptcy hearing on 17 January. 

US business news sources this week reported that 90% of senior creditors have agreed to terms relating to the $18 billion debt restructure of the bankrupt trading unit Caesars Entertainment Operating Company (CEOC).

Following two years of heated bankruptcy negotiations, with multiple creditor lawsuits made against CEC, it appears that debt stakeholders are now willing to "drop concerns" in order to progress negotiations towards final closure. 

Heading into its crucial 17 January hearing, CEC will present its new restructuring plans which will see it create a new business entity in which its current private equity owners will own approximately 6% of equity. 

The restructuring of Caesars’ CEOC unit is now cited as one of US legal history’s most complex cases with the firm creating multiple corporate entities and asset/debt vehicles which have complicated negotiations with debt holders.  

Caesars’ debt issues emerged after the ill-timed 2008 private equity buyout by Apollo Global Management and TPG Capital of what was then Harrah’s Entertainment Inc.

At the time of its leveraged buyout Apollo and TPG valued the business at circa $28 billion, however Caesars prospects were severely impacted by the 2008 financial crisis. The debt levels involved in the highly-leveraged buyout left the company exposed when the 2008 financial crisis turned into a severe recession.  

Totally Gaming says: As CEC heads for its ‘potential’ final bankruptcy hearing, US legal news sources have reported that the business has spent approximately $300 million on legal fees since January 2015. Even after the reorganisation, questions remain about the viability of the business and its future with some analysts speculating over whether Caesars is simply a "dead gaming giant" after years of expending energy, focus and eye-watering amounts of money. Staff will no doubt hope that management will be able to reviatlise the business once they are able to concentrate on running the operation withour debt distractions.

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