U.S. Bankruptcy Judge A. Benjamin Goldgar is scheduled to start a multiday hearing on Jan. 17 in Chicago to decide whether to approve the plan.
Senior lenders to the insolvent company dropped their objection to the terms of the plan after Caesars filed revisions on Friday in Chicago federal court.
The lenders had been demanding changes to documents governing $2 billion in new debt that Las Vegas-based Caesars would issue to the group as part of its reorganization. Senior bondholders had opposed those changes, people familiar with the dispute said.
The parties spent this week negotiating an end to the dispute, and a court document announcing the accord was filed Friday, just hours before the senior lenders would have been able to walk away from the reorganization deal.
Both contending groups had initially agreed to a deal with lower-ranking creditors and Apollo Global Management LLC and TPG Capital, the private-equity firms that indirectly own the bankrupt gambling company.
The complicated agreement would force Apollo and TPG to give up control of the operating company and its non-bankrupt parent, Caesars Entertainment Corp., in exchange for canceling about $10.5 billion worth of the $18 billion that the operating company owes creditors.
U.S. Bankruptcy Judge A. Benjamin Goldgar is scheduled to start a multiday hearing on Jan. 17 in Chicago to decide whether to approve the plan
The senior lenders -- including Franklin Mutual Advisers LLC and GSO Capital Partners LP -- are in line to get $6.3 billion when the Caesars unit exits bankruptcy, or 115 percent of their claim, according to court documents. A committee representing those lenders had threatened to pull out of the carefully crafted deal to reorganize the insolvent casino operator and recombine it with its profitable parent unless changes were made.
Lenders had been negotiating with senior-ranking bondholders, who also have first claim on the company’s assets. The bondholders said the lenders’ proposed changes could potentially reduce the $7.2 billion they will get, according to two people with knowledge of the dispute. The bondholders had been estimated to recover about 109 percent of what they’re owed, according to court documents.
Apollo, TPG and the creditors struck a deal to reorganize Caesars and let the operating unit emerge from bankruptcy with less debt. The initial agreement followed contentious legal disputes stretching back to before the January 2015 bankruptcy filing.
That deal boosted estimated recoveries for second-lien noteholders to 65.5 percent from about 39 percent, while trimming the senior lenders’ recovery, according to court documents.
The case is In re Caesars Entertainment Operating Co. Inc., 15-01145, U.S. Bankruptcy Court, Northern District of Illinois (Chicago).