U.S. judge gives Caesars temporary reprieve from lawsuits

Wed Jun 15, 2016 1:31pm EDT
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By Tracy Rucinski

CHICAGO (Reuters) - A U.S. judge on Wednesday temporarily halted lawsuits seeking $11.4 billion in damages from Caesars Entertainment Corp (CZR.O: Quote) on Wednesday, urging the parties in the bankruptcy of its operating unit to settle before an injunction expires in August.

The bankruptcy of the operating unit, Caesars Entertainment Operating Corp (CEOC), in January 2015 has pitted some of the most aggressive investors on Wall Street against each other.

Several hedge funds that own bonds are suing the Caesars parent in New York and Delaware, alleging it reneged on guarantees from bonds issued by CEOC prior to the unit's $18 billion bankruptcy.

Caesars is facing $7.7 billion in claims in New York and $3.7 billion in Delaware from the bondholder lawsuits.

Caesars has denied wrongdoing and said it could be forced into bankruptcy along with its operating unit if courts rule in favor of the bondholders.

Shares of Caesars jumped 9.3 percent at $8.58 on the Nasdaq.

CEOC lawyers said they were close to reaching an agreement on its reorganization, which hinges on a $4 billion contribution from its parent to settle allegations of asset-stripping. Judgements against the parent company would derail the plan, the lawyers said.

"There better be some talking and it better be fast," Judge Benjamin Goldgar said during a hearing in U.S. Bankruptcy court in Chicago.   Continued...

The marquee sign at Caesars Palace displays a welcome to Celine Dion in Las Vegas, Nevada February 16, 2011. REUTERS/Steve Marcus