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Actionable news in CZR: Caesars Entertainment Corporation,

Caesars Suing Apollo to Stop Creditors From Suing Apollo

  • Bankrupt casino operator bids to halt bondholder court attack
  • Thicket of creditor litigation threatens reorganization plans

Caesars Entertainment Operating Co. has a new strategy for resolving its contentious bankruptcy: Sue its parent, the parent’s owners and their executives before disgruntled bondholders do.

The bondholders have been seeking to bring a lawsuit in Chicago federal court accusing Caesars Entertainment Corp., Apollo Global Management and TPG of improperly shuffling valuable assets out of the operating unit before pushing it into bankruptcy. By bringing a watered-down version of the same claims, the operating unit, known as CEOC, would be able to control the litigation process -- and possibly avoid court action on the claims altogether.

CEOC argues that its Aug. 9 suit gives it the right to try to settle the creditor claims, worth billions of dollars, as part of its Chapter 11 reorganization plan. A trial on the plan itself is scheduled to start in January.

The operating company asked U.S. Bankruptcy Judge A. Benjamin Goldgar in Chicago Wednesday to cancel hearings on whether the dissident bondholders should be allowed to pursue their claims in his court.

Hours before the hearing was set to begin, a mediator reported progress in settlement talks between the bondholders and parent Caesars Entertainment Corp., or CEC, that could eliminate the legal challenges threatening the Las Vegas-based casino giant.

‘Successful Conclusion’

“There ultimately should be a successful conclusion to the mediation before the conclusion of the confirmation hearing,” the mediator, retired U.S. District Judge Joseph Farnan, said in a report filed late Tuesday in Chicago bankruptcy court. “More time is needed to resolve by mediation the complex issues raised.”

The report was one sign that the heated courtroom battles surrounding CEOC’s bankruptcy could be cooling down. A committee representing bondholders leading the fight against Caesars agreed that a short delay in their request to sue would be acceptable.

Caesars also announced a settlement with a smaller, lower-ranking creditor who had brought claims that mirrored the bondholder allegations.

According to a company regulatory filing Wednesday, Frederick...