A New York judge dealt Caesars Entertainment’s bankruptcy reorganization plan a possible fatal blow, ruling the company violated federal law.
On Thursday, the judge said Caesars violated the law when it shuffled and refinanced debt as part of an alleged scheme to protect itself from lower-ranking creditors.
The ruling came in a related lawsuit in New York on the same day the casino company sought bankruptcy protection last week in Chicago.
The gaming giant has come to a bankruptcy agreement with its larger creditors but its junior creditors have filed an involuntary bankruptcy petition against it.
Gaming reporter for the Las Vegas Review-Journal Howard Stutz told KNPR's State of Nevada that the real problem is that some of the smaller investors in the company felt it had illegally moved some its most valuable properties out of the way of the bankruptcy filing.
The investors felt it was an effort to hide some of the gaming giant's assets.
"It is a real complex bankruptcy," Stutz said, "There is a complex set of issues that are going to have to be decided in this case."
Caesars told Bloomberg News it disagrees with the ruling. And doesn’t expect it to impact its planned reorganization.
Despite the filing, no one believes anything will change in the daily operation of the casinos. The dice will still roll, the slot machines will still spin and the players' rewards cards will still be honored. The casino's corporate structure is going through an overhaul to make the balance sheet easier to manage, Stutz said.
Gaming Industry Tidbits:
The Chinese government is gearing up to review gaming licensees in Macau, which has been the driver of the gaming industry over the last several years. Stutz said concerns about the changes in Macau may cause some of the biggest gaming companies there to cut back on dividends. But, Wynn Resorts, MGM Resorts International and Sands Corporation are all working on large projects in the region.
Nevada sports books are asking the Nevada Gaming Commission to allow betting on Olympic sports. Stutz pointed out that betting on Olympic sports is already legal in other places like Europe and Britain. The growth of mobile sports betting has made it easier to bet and increased the take for sports books. According to Stutz, the real question is whether regulators will be choosing which events will be allowed to bet on or whether the books will make the choice.
Howard Stutz, gaming reporter, Las Vegas Review-Journal
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