Casino operator Caesars Entertainment Corp (CEC) had a mixed day in court on Thursday, as a federal judge told the company to prepare to defend its attempted screwing of junior creditors.

On Thursday, New York US District Judge Shira Scheindlin rejected a request by bondholders for an immediate ruling on whether CEC’s refusal to honor $7b in debts owed by its bankrupt main unit, Caesars Entertainment Operating Co (CEOC) was a violation of federal law.

However, Scheindlin told both parties to prepare full arguments on whether CEC’s decision to remove loan guarantees on the debts owed by CEOC to its junior creditors violated the federal Trust Indenture Act of 1939. Upon receipt of these arguments, Scheindlin will decide whether to issue an immediate ruling or proceed to a full trial. Scheindlin has set an Oct. 7 hearing on the matter.

The suit was filed last year after CEC sold 5% of CEOC to undisclosed institutional investors. CEC subsequently claimed that a clause in the loan agreements stipulated that CEC was no longer liable for CEOC’s debts if CEOC wasn’t 100% owned by CEC. Also in dispute are CEC’s transfers of profitable assets out of CEOC into other CEC units prior to CEOC filing for Chapter 11 bankruptcy protection in January. (Now, just for fun, try saying ‘CEC-CEOC’ three times quickly.)