Yesterday in Chicago, U.S. Bankruptcy Judge A. Benjamin Goldgar decided to extend Caesars Entertainment Operating Co.’s (CEOC) exclusive right to offer a proposal to get out of bankruptcy. They will have until November to offer him a plan.

Early this year Caesars Entertainment Corporation’s (CEC) main business unit Caesars Entertainment Operating Co filed for bankruptcy because it was unable to manage debt resulting from going private in 2008 with a leveraged buyout of Harrah’s for $30.8 billion. The parent company of Caesars is not bankrupt. CEC is controlled by the private equity firms Apollo Global Management LLC and TPG Capital Management.

CEC was given the task of designing a restructuring plan in order to pay its creditors and this unsettled a number of junior creditors who may only receive a few pennies on each dollar owed. These junior creditors do not want CEC to be in control of the restructuring process as they believe that it will most likely be one-sided and favour CEC. They would like to have a third party involved who can submit an alternative restructuring plan that also represents their interests.

“The debtors have a plan,” Judge Goldgar said. “We don’t know whether it is the plan.”

Goldgar stated that Caesars had a very complicated corporate footprint and that was one of the key factors that he considered before making the decision.

Junior creditors had more disappointment in store for them as Judge Goldgar also allowed CEC to continue its relationship with law firm Kirkland & Ellis LLP who are currently serving as the company’s bankruptcy attorneys. Creditors had voiced their displeasure over Kirkland & Ellis LLP as the law firm has a number of other clients that are owned by Apollo Management and TPG Capital.

Goldgar advised creditors to be patient and give CEC the extended time to come up with a plan and then decide if it was a good plan or not.

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