Caesars faces new hurdle

Caesars is currently managed by TPG Capital and Apollo Global Management and the two firms’ officials need to find the best approach towards persuading the judge to halt the lawsuits that might lead to the casino giant’s bankruptcy.

Caesars’ representatives need to submit the necessary paperwork outlining the reasons why the cases need to remain frozen. If the cases are put on hold, Caesars will have enough time to negotiate deals with creditors and avoid eventual bankruptcy.

The current freeze expires on August 29th, but a hearing regarding the freeze extension was set for August 23rd when Judge Benjamin Goldgar will take a final stance on the matter.

Last week Caesars made a lucrative offer to the junior investors and offered 55 cents on the dollar. As company representatives reported earlier, almost 40% of the second-lien bondholders have found the new deal profitable.

However, Caesars’ mediators were notified that a group of bondholders has rejected the offer. According to reliable sources, the bondholders are not likely to sell their debt unless the buyer agrees to be a holdout.

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The creditors accuse Caesars of not keeping its promise to repay the huge debt within the agreed time frame. The company is also accused of moving assets beyond the reach of the creditors right before announcing the bankruptcy of the operating unit last year

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The amount the operating company owes is estimated at $5.5 billion. If the operating company is forced to repay the debt, Caesars will have no choice but to declare bankruptcy.

Back in June Caesars was granted a two month and a half reprieve and was expected to sign a restructuring deal with the creditors. As for the new freeze extension request, people with knowledge of the matter claim the chances of getting judge’s nod were quite slim.

In addition, the judge who is in charge of the Caesars’ lawsuit said the company officials needed to discuss all possibilities with the holdouts instead of trying to find a roundabout way to make them accept their terms.

The judge said that if Caesars is granted yet another extension, that would be a prerequisite for avoiding negotiations with second-lien note holders, which was not likely to lead to the desired outcome.