By Nick Brown
(Reuters) – Timing is everything for creditors appealing the start date of the bankruptcy filing for Caesars Entertainment Corp’s <CZR.O> operating company in hopes of unlocking $468 million in value.
Caesars’ unsecured creditors’ committee on Monday asked a federal judge to review an April 29 ruling that Caesars is not obligated to consent to a forced bankruptcy case filed by creditors on Jan. 12.
Caesars filed for Chapter 11 bankruptcy voluntarily three days later, on Jan. 15.
Creditors can push a company into bankruptcy, but must justify the filing under a series of legal standards. Those standards are already the subject of a trial slated for August.
The unsecured creditors separately asked bankruptcy Judge Benjamin Goldgar, in Chicago, to force Caesars to consent to the Jan. 12 case because they say Caesars might have cost them money by waiting.
Caesars in October granted certain stakeholders a lien on as much as $468 million in cash to earn their support for its proposed restructuring. It waited until Jan. 15 to file for bankruptcy so the lien would be outside a statutory 90-day window to challenge certain pre-bankruptcy payments, the unsecured creditors argue.
Giving new meaning to the term “time is money,” the unsecured creditors want to bring the case back within that window by enforcing the Jan. 12 filing. Invalidating the lien would free up the money for other creditors.
Goldgar called the request “a rather obvious exercise in question begging.” The lien payment is only illegal, he said on April 29, if he grants the committee’s request. “The logical flaw is glaring,” Goldgar said.
The merits of the Jan. 12 case should instead be decided at the August trial, he said.
The unsecured creditors have said Caesars cannot refuse to consent to the start date without court approval, in part because its right to grant or refuse consent is property of its estate, which is under court supervision.
The wonky dispute typifies the arcane legal battles that crop up in a complex, $18 billion case like Caesars, which has already seen heavy litigation after only four months.
Creditors have accused the company’s private equity owners, Apollo Global Management <APO.N> and TPG Capital Management [TPG.UL], of looting Caesars’ best assets, transferring profitable casinos to non-bankrupt affiliates beyond creditors’ reach. An independent examiner is tasked with investigating the transfers, while Caesars’ unsecured creditors’ committee is planning its own probe.
The bankruptcy is In re Caesars Entertainment Operating Co Inc, U.S. Bankruptcy Court, Northern District of Illinois, No. 15-1145.
(Reporting by Nick Brown in New York; Editing by Lisa Shumaker)