(Reuters) - In a case full of twists, Caesars Entertainment Corp (CZR.O) late on Monday won a two-week extension on a shield from lawsuits worth billions of dollars just days after a different U.S. court allowed those cases to proceed.
Investors are suing Caesars for reneging on its guaranty of bonds issued by its operating unit, Caesars Entertainment Operating Co Inc, or CEOC, which is bankrupt. Those lawsuits will now be stayed until Sept. 16, according to a filing in U.S. District Court in Chicago.
An appeal hearing is scheduled for Tuesday in Chicago, just hours before U.S. District Judge Jed Rakoff in Manhattan was scheduled to hear oral arguments from several bondholders.
Shares of the Nevada-based gaming company closed down about 16 percent at $6.35 on Nasdaq on concerns of an imminent ruling on the New York lawsuits, which the company has warned could plunge it into bankruptcy alongside its operating unit.
CEOC had argued that a halt to lawsuits against its non-bankrupt parent was critical to protecting a multibillion-dollar contribution to its reorganization plan.
The operating unit filed for bankruptcy in January 2015 with $18 billion in debt.
Until now, Caesars’ operating unit was able to use a bankruptcy court shield to protect its parent from some $11 billion in bondholder lawsuits filed in New York and Delaware.
That shield was scheduled to expire on Aug. 29 after U.S. Bankruptcy Judge Benjamin Goldgar in Chicago refused last week to grant a third stay on the lawsuits.
The bankruptcy has embroiled some of the largest funds on Wall Street, pitting Caesars’ controlling investors, Apollo Global Management (APO.N) and TPG Capital Management [TPG.UL], against bondholders, led by hedge fund Appaloosa Management.
Appaloosa has accused Caesars of stripping its operating unit of its best assets prior to the 2015 bankruptcy filing, allegations that were backed by an independent examiner’s report in March.
Caesars has denied the allegations.
Reporting by Tracy Rucinski in Chicago and Tom Hals in Wilmington, Delaware; Editing by Meredith Mazzilli and Jonathan Oatis