Caesar’s Entertainment Corporation’s (CEC) stocks took a dramatic 41% fall despite attempts by Marc Rowan of Apollo Global Management LLC to dump billions of dollars of investment debt through bankruptcy of its Operating Unit (CEOC).

Even though Rowan has attempted to restructure debt to the benefit of the largest CEC stockholders, U.S. Bankruptcy Judge Goldgar in Chicago has ruled that smaller stakeholders of the debt-heavy CEOC can sue the parent company while the Operating Unit is in Chapter 11. The ruling could force CEC into a bankruptcy filing of its own.

Prior to Goldgar’s ruling, Caesars principals had reached restructuring agreements with a limited number of stake holders totaling about 30% of the investors, which fell significantly short of the two-thirds majority required by the court to meet the criteria for consensus.

In a filing with the SEC Monday evening, Caesar’s principals attempted to sway favor by stating that those investors who have already agreed to the restructuring plan, would see a “substantial improvement in recoveries”. However, the agreement, which includes receiving a forbearance fee of at least $200 million in convertible debt representing only a small fraction of their outstanding debt, leaves Apollo and TPG with primary ownership stakes.

Additionally, the agreement would only come in to effect once 50% of the stakeholders signed on to the plan. Bloomberg reported that the agreement would also extend CEOC bankruptcy restructuring of early 2016 into mid-year, beyond the standard 1 year from filing.

The smaller stakeholders which include David Tepper’s Appaloosa Management as well as the Oaktree Capital Group, Tennenbaum Capital Partners, and Centerbridge Partners take issue with Apollo’s and TPG’s restructuring techniques to manage the debt. With today’s ruling in Chicago, these investors are better positioned, through their lawsuit challenging Apollo’s and TPG’s pre-bankruptcy reorganization, to go after a greater equity stake.

Bloomberg Intelligence analyst Julia Winters concurs: “Caesar’s owners will need to trade more of their equity to creditors in exchange for eliminating debt.”

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