\n(Bloomberg) \u2014 A Caesars Entertainment Corp. creditor group said managers should be stripped of control of the casino company\u2019s operating unit because they looted the subsidiary of billions of dollars in assets.<\/p>\n
\tUMB Bank, trustee for first-lien noteholders owed about $1.25 billion, sued Caesars yesterday in Delaware Chancery Court, repeating allegations made by junior creditors in August.<\/p>\n
\tYesterday\u2019s suit, the first by senior creditors, came after some had agreed on the outline of a debt restructuring plan for the operating unit. The first-lien creditors yesterday asked the court to appoint a receiver for the unit.<\/p>\n
\tBoth the junior and senior creditors have assailed Caesars\u2019 directors, including David Bonderman, co-founder of buyout firm TPG Capital, and Apollo Global Management LLC\u2019s Marc Rowan.<\/p>\n
\tTPG and Apollo took Caesars private in a $30 billion leveraged buyout in 2008 that loaded the gambling company with more debt than it can handle. Since then, the new owners have stripped Caesars Entertainment Operating Co., or CEOC, of its most valuable assets, including Las Vegas casinos, some creditors say.<\/p>\n
\t\u2018Thoroughly Ransacked\u2019<\/p>\n
\tBonderman and the other directors \u201chave thoroughly ransacked CEOC in a sweeping and now transparent plan to take CEOC\u2019s prime assets for themselves and leave its liabilities and creditors behind,\u201d according to yesterday\u2019s filing.<\/p>\n
\tCaesars has said its largest division won\u2019t have enough cash to repay debts by the fourth quarter of 2015 if it can\u2019t restructure its obligations through refinancing, creditor negotiations or bankruptcy.<\/p>\n
\t\u201cWe believe the claims in this lawsuit are baseless and that this filing is an attempt to derail constructive talks the company is having with creditors concerning a restructuring of CEOC,\u201d said Stephen Cohen, a spokesman for the Las-Vegas based company at Teneo Holdings LLC.<\/p>\n
\tOwen Blicksilver, a spokesman for Bonderman, said yesterday that he couldn\u2019t immediately comment on the lawsuit.<\/p>\n
\tCaesars, lenders and some first-lien bondholders agreed to restructure debt owed by CEOC by putting the unit into bankruptcy and allowing it to emerge as a real estate investment trust, people familiar with the talks said. Under the proposal, senior debt holders would get more than junior creditors.<\/p>\n
\t90% Recovery<\/p>\n
\tFirst-lien bondholders have sought to extract a recovery of about 90 cents on the dollar from CEOC, the people said. The reorganization proposal will give them a combination of cash, new securities and a form of equity from the unit, they said. The company disclosed that it offered those bondholders 93.8 cents.<\/p>\n
\tThe new lawsuit by UMB Bank and the August lawsuit by the trustee for junior creditors owed $3.7 billion rely on the same set of facts about the asset transfers Caesars imposed on the operating unit.<\/p>\n
\tIn their suits, the creditors claim that the goal of the transfers was to create a \u201cgood Caesars\u201d with lower debt and profitable assets and a \u201cbad Caesars\u201d with higher debt and lesser assets. Should \u201cbad Caesars\u201d fail, \u201cgood Caesars\u201d would be protected. Such lawsuits are commonly brought in federal bankruptcy courts by court-sanctioned creditor committees or court-approved trustees.<\/p>\n
\tThe operating unit owes $18.4 billion of Caesars\u2019 $25.5 billion in debt as of September, the company said in a regulatory filing.<\/p>\n
\tAccording to the complaint filed yesterday, from October 2013 until May, Caesars moved assets worth more than $7 billion away from the unit, including six properties on the Las Vegas Strip, an online gambling business and 50 percent of the management fees the unit receives related to casinos its runs.<\/p>\n
\tWhat the unit got return was worth $3.6 billion less than the assets, according to the lawsuit.<\/p>\n
\tThe case is UMB Bank v. Caesars Entertainment Corp., CA NO. 10393, Delaware Chancery Court (Wilmington).<\/p>\n
No replies were posted for this topic.<\/p>\n","protected":false},"excerpt":{"rendered":"
(Bloomberg) \u2014 A Caesars Entertainment Corp. creditor group said managers should be stripped of control of the casino company\u2019s operating unit because they looted the subsidiary of billions of dollars in assets. UMB Bank, trustee for first-lien noteholders owed about…<\/p>\n","protected":false},"author":36,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10],"tags":[],"class_list":["post-8363","post","type-post","status-publish","format-standard","hentry","category-latest-casino-news"],"_links":{"self":[{"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/posts\/8363","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/users\/36"}],"replies":[{"embeddable":true,"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/comments?post=8363"}],"version-history":[{"count":0,"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/posts\/8363\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/media?parent=8363"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/categories?post=8363"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumarchives.tmsites.net\/index.php\/wp-json\/wp\/v2\/tags?post=8363"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}