CHICAGO Caesars Entertainment Corp (CZR.O) must face lawsuits from bondholders seeking some $11 billion in claims, a U.S. judge ruled on Friday in a decision the casino company had warned could push it into bankruptcy alongside its operating unit.
Caesars Entertainment Operating Co (CEOC), which filed for Chapter 11 protection in January 2015, was asking for a third court shield from lawsuits against its parent to protect a multibillion-dollar contribution to its reorganization plan.
A current injunction expires on Aug. 29, a day before Caesars faces a potential ruling in New York on lawsuits from bondholders alleging it reneged on guarantees from bonds issued by CEOC prior to the unit’s $18 billion bankruptcy.
CEOC had argued that another halt to a decision on those lawsuits was critical to securing a settlement with holdout bondholders on its reorganization plan.
“I can’t find that an injunction is likely to enhance the prospects for negotiation,” U.S. Bankruptcy Judge Benjamin Goldgar in Chicago said in his courtroom ruling.
Both Caesars and CEOC said they were disappointed by the judge’s decision. The court’s refusal to continue to stay the litigation over the bond guarantees puts Caesars’ “substantial contribution” to CEOC’s reorganization plan “at serious risk,” a Caesars spokesman said in an email.
CEOC lawyers said they planned to appeal the ruling.
Shares of Caesars closed slightly lower on Friday at $7.53 on the Nasdaq, before the ruling was issued.
(Editing by Meredith Mazzilli and Matthew Lewis)