U.S. judge says may be too late to halt lawsuits against Caesars

Wed Jun 8, 2016 4:07pm EDT
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By Tracy Rucinski

CHICAGO (Reuters) - A U.S. bankruptcy judge said on Wednesday he must look deeper into whether he has the authority to halt bondholder lawsuits against Caesars Entertainment Corp (CZR.O: Quote) in New York and Delaware given that proceedings have already begun.

Several hedge funds are suing the casino company for a total of $11.4 billion, saying it reneged on guarantees on bonds issued by its unit, which filed for bankruptcy in January 2015. Caesars plans to pump about $4 billion to help restructure the unit, called Caesars Entertainment Operating Co.

Legal action against the parent could jeopardize the funding and force it into bankruptcy as well, the unit argued in seeking an injunction to stop the lawsuits.

U.S. Judge Benjamin Goldgar said in bankruptcy court in Chicago that he may not have the power to stop the courts or parties involved from proceeding with the cases because they are already in motion.

"I'll take a look (at prior case law) when there's more time," Goldgar said.

Caesars has the right to terminate its funding agreement by June 22 if the judge does not halt the lawsuits by June 15, the unit's lawyers said at the hearing.

Shares of Caesars fell 5.6 percent to $8.19 on Wednesday.

Jim Millstein, a financial adviser to the bankrupt operating unit, testified that the parent company might have to file for bankruptcy protection if it was hit with billions of dollars in damages from the bondholder cases.   Continued...

Las Vegas Strip casinos are seen from the 550 foot-tall (167.6 m) High Roller observation wheel, the tallest in the world, in Las Vegas, Nevada April 9, 2014. REUTERS/Las Vegas Sun/Steve Marcus