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
Before You Buy: Managing Real Estate and Permitting Risk for BESS Projects in New York and New Jersey
For developers pursuing battery energy storage system (BESS) projects, finding the right property is only the beginning. BESS site selection is as much a legal and transactional exercise as a real estate decision, with risk analysis central to the project’s ultimate success. Key Takeaways The core questions for BESS site selection in New York and […]
Author: Nicholas Wall
What Business Owners Get Wrong Before Meeting a Litigation Attorney
What should you expect when meeting a litigation attorney about a business dispute? You should expect to describe the dispute in your own words, hand over the most important documents, flag any deadlines or immediate threats, and leave with a clearer picture of the problem, what information is still needed, and the likely next steps. […]
Author: Michael Mietlicki
Arbitration vs. Litigation vs. Mediation: What New Jersey Businesses Should Know Before Signing a Contract
Arbitration resolves disputes privately before an arbitrator whose decision is usually final, while litigation resolves them in court with full rights of appeal. Whether a business ends up in arbitration or litigation is often decided when it signs the contract, long before any dispute arises. Key Takeaways When facing a contract dispute, carefully consider your […]
Author: Graham Staton
Can You Own Part of a New Jersey Business Without a Written Agreement?
Can you own part of a business in New Jersey without a written agreement? Yes, it is possible. Under New Jersey’s Uniform Partnership Act, a partnership can arise when two or more people carry on a business as co-owners for profit, whether or not they ever intended to form one. Ownership doesn’t necessarily depend on […]
Author: Michael Mietlicki
Crisis-Proofing Your New Jersey Business: Building a Crisis Response Plan Before You Need One
For New Jersey businesses, crisis preparedness should be viewed as a legal and operational function, not simply an emergency-management exercise. A well-designed crisis response plan can help preserve evidence, protect confidential communications, meet reporting obligations, limit unnecessary exposure, and prevent an already difficult situation from becoming a larger legal problem. Key Takeaways A serious crisis […]
Author: Sean M. Pena
Monmouth County's Next Development Wave: What Developers and Investors Need to Know
Monmouth County is entering a significant new phase of development. For those looking to acquire property or undertake a new project, understanding the market opportunity is only the beginning. The more important question is whether a particular property can actually be developed as contemplated and what approvals, agreements, and other conditions will be required to […]
Author: Donald M. Pepe
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.