Joel R. Glucksman
Partner
201-896-7095 jglucksman@sh-law.comFirm Insights
Caesars Bankruptcy Plan Dented By Federal Judge
Author: Joel R. Glucksman
Date: February 2, 2015
Key Contacts
Back
A federal judge may have just dealt a fatal blow to Caesars Bankruptcy Plan.
Caesars bankruptcy was filed on January 15, 2015. However, in August, Caesars’ allegedly transferred a number of its assets to related business entities out of reach of creditors, according to Bloomberg. The company then canceled certain of its guarantees, so that holders of second-lien notes issued in 2005 and 2006 were cut out. These noteholders then filed an involuntary bankruptcy against Caesars Entertainment Operating Co., the largest of the Caesars operating companies.The noteholders alleged that Caesars was barred from altering its obligations to pay its bonds without full consent from the holders under Section 316 of the Trust Indenture Act.
District Judge Shira Scheindlin described the complaint as an allegation that Caesars’ plan was to put the main unit of Caesars bankruptcy while protecting TPG Inc. and Apollo Management LP from its creditors, the news source reported.
The ultimate result would be that first-lien noteholders would receive 92 percent of their stake, while second-lien noteholders would recover just $549 million of their $5.24 billion stake.
Scheindlin ruled that the deal was illegal, noting that it amounted to “impermissible out-of-court debt restructuring” that left bondholders “with an empty right to assert a payment default from an insolvent issuer,” according to ValueWalk. Caesars’ spokesperson Stephen Cohen expressed the company’s disapproval of the ruling.
“We respectfully disagree with the court’s ruling, which was based simply on the plaintiffs’ allegations and that we believe is inconsistent with the provisions [of federal law],” said Cohen. “And given the size of the claims at issue and our strong defenses, we do not expect the ruling to impact the planned reorganization.”
While the ruling was only preliminary, it is expected to strengthen the claims of second-lien bondholders alleging harm from Caesars’ asset switch.bt
Any thoughts on the federal judge’s blow to Caesars Bankruptcy plan? Feel free to leave a comment in the section below.
- Practices: Bankruptcy & Creditors' Rights, Corporate Transactions & Business, Bankruptcy Litigation
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Related Posts
See all
10 Common Issues in Franchise Disputes
The most common franchise disputes involve breach of contract, franchise termination and non-renewal, intellectual property rights, territorial encroachment, royalty and fee payments, franchisor support obligations, and violations of state franchise laws such as the New Jersey Franchise Practices Act. Franchisors and franchisees can often resolve these conflicts by providing written notice detailing the dispute and […]
Author: Paul Grossman
Reputational Risk and Legal Exposure: Why New Jersey Businesses Must Manage Them Together
New Jersey businesses must manage legal and reputational risk together because modern disputes play out on two fronts at once: the legal proceeding itself and the court of public opinion, where customers, employees, investors, and business partners often reach conclusions long before a judge or jury has had the opportunity to evaluate the facts. Success […]
Author: Sean M. Pena
Eviction Is Not Always the End: Understanding Post-Possession Rent Claims in New Jersey and New York
No. An eviction does not automatically end a tenant’s obligation to pay rent. Post-eviction rent claims are common because recovering possession resolves who has the right to occupy the premises, but it does not extinguish the tenant’s contractual obligations under the lease. Whether unpaid or future rent remains owed depends on three factors: the lease’s […]
Author: Donald M. Pepe
Company Dissolved? Legal and Financial Consequences to Expect
A company is dissolved; legally, it ceases to exist. Accordingly, dissolution results in significant legal and financial consequences. It is a process that must be properly managed to avoid continuing liability. The Corporate Dissolution Process Corporate dissolution is the legal process of formally closing a corporation, paying its debts and distributing the remaining assets. Most […]
Author: Jay McDaniel
The Legal Implications of Signing a Triple Net Lease
A triple net lease is a commercial lease in which the tenant pays the property’s real estate taxes, insurance, and maintenance costs, known as the three nets, in addition to base rent. They are most often used in freestanding retail and office buildings and in large single-tenant industrial properties, with terms that typically run 10 […]
Author: Donald M. Pepe
Business Law FAQs: What Companies Need to Know
Running a business in New Jersey and New York means operating within one of the most legally complex environments in the country. From the moment you form your company to the day you sell it, and every contract, hire, dispute, and transaction in between, business law is present in decisions that look, on the surface, […]
Author: Scarinci Hollenbeck, LLC
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.