Casino operator Caesars Entertainment got a belated Christmas present via a procedural victory in its ongoing court fight with some of its junior creditors.
On Tuesday, New York US District Judge Shira Scheindlin (pictured) ruled against junior creditors’ request for a quick ruling on their lawsuit alleging that Caesars improperly reneged on its debt guarantees. In a 31-page opinion, Scheindlin said there were material disputes surrounding the parties’ claims that would only be resolved by a trial.
In May 2014, Caesars announced that it had sold 5% of its main unit, Caesars Entertainment Operating Co (CEOC), to undisclosed institutional investors. Caesars maintained that the fine print on the bondholder agreements stipulated that if Caesars didn’t hold 100% of the equity in CEOC, the parent company was no longer obligated to honor guarantees worth billions of dollars to junior creditors.
Scheindlin’s ruling affects $750m of that debt held by MeehanCombs Global Credit Opportunities Funds and Frederick Barton Danner. In August, Scheindlin made a similar ruling on requests for a quick ruling on lawsuits brought by other junior creditors who were also screwed by Caesars’ sleight of hand. Still more suits are awaiting their own rulings.