Yesterday US Bankruptcy Judge Benjamin Goldgar ruled that various lawsuits against Caesars Entertainment can go forward. Caesars Entertainment Operating Company (CEOC) is already in bankruptcy; this ruling increases the chances that Caesars Entertainment Corporation (CEC) follows CEOC into Chapter 11.
So what does this mean? First, I don’t think there’s potential that the bankruptcy will get very litigious, complex and long; rather, there’s near certainty that it will. I earlier wrote that the bankruptcy would take “a long time” to resolve; I think that’s certain.
Additionally, that the other lawsuits are going forward is bad news for the current owners of CEC. Imho, they were hoping that they could create a “bad” company, get rid of a ton of debt, and emerge from Chapter 11 with something of value. That’s now less than an even bet.
Instead, the lawsuits are likely telling the truth: That CEOC was created as a way of shuffling assets. This means it is now more likely than not that the rest of Caesars will end up in Chapter 11.
That would put a stop to the lawsuits. It would also mean the current majority owners of CEC (Apollo Global Management and TPG Capital) will see the value of their investment go towards $0. It could also mean that some of the current assets of Caesars will end up being sold. The big problem with Caesars is their debt load. Bankruptcy will get rid of the debt, and many of the underlying assets have substantial value.
One last certainty: The lawyers involved will be making plenty of money.
Tags: Bankruptcy, Caesars.Entertainment