Laura J. Keller, Bloomberg ·

Paulson & Co. is among creditors closing in on a deal intended to salvage a bankruptcy plan Caesars Entertainment Corp. is pushing to restructure its insolvent operating unit, according to two people with knowledge of the matter.

The hedge-fund firm controlled by billionaire John Paulson and other junior debt holders of Caesars Entertainment Operating Co. including Canyon Partners and Soros Fund Management are discussing the plan with the casino company, said the people, who asked not to be identified because the talks are private. The deal would extract better terms for the creditors than a previous version that has failed to gather enough support, the people said.

Caesars has tried for months to line up enough senior creditors to win approval of a proposal to cut lower-ranking debt, allow the parent to retain a stake in the operating unit and halt related lawsuits against its private-equity owners, Apollo Global Management LLC and TPG Capital.

Representatives for Paulson, Canyon, TPG and Las Vegas- based Caesars declined to comment. A spokesman for Apollo didn’t immediately respond to telephone and e-mail requests seeking comment while a representative for Soros didn’t immediately return messages after business hours.

The negotiations are happening while the company and its private-equity sponsors continue confidential talks with a group of higher-ranked, first-lien bondholders to amend the restructuring support agreement to which they had previously agreed, said two of the people.

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