A cash-strapped division of casino giant Caesars Entertainment Corp. filed for bankruptcy protection Thursday in Chicago, hoping the court agrees to its plan to get out from under $18.4 billion in debt.
The division, Caesars Entertainment Operating Co., owns and operates most of Caesars' 50 properties worldwide. Caesars CEO Gary Loveman said in a statement that its casino-hotels would remain open and continue to host meetings and events, assuring customers that their loyalty points would still accrue and that the company's lineup of onstage entertainers would perform according to their schedules.
"I am very confident in the future prospects of our enterprise, which will combine an improved capital structure with a network of profitable properties," Loveman said in the statement.
The bankruptcy filing doesn't apply to parent company Caesars Entertainment Corp. and affiliated companies Caesars Growth Partners and Caesars Entertainment Resort Properties.
More than 30,000 people are employed at the debt-laden division's 38 casino-hotels, including Bally's and Caesars in Atlantic City and the iconic Caesars Palace on the Las Vegas Strip.
The filing from Caesars Entertainment Operating Co. in a Chicago bankruptcy court came as no surprise.
The company has been weighed down by sizable debt ever since Apollo Global Management LLC, TPG Capital LP and other investors bought the casino giant in January 2008 for $30.7 billion.
Caesars has been negotiating with creditors and lenders for months on a reorganization plan that would turn the division into a real estate investment trust, promising creditors cash or new debt.
Not everyone is on board, though, including three junior creditor hedge funds owed $41 million that contend the plan isn't fair. In a bid to get more favorable terms, they filed a petition Monday in Delaware's federal court to force the division into involuntary bankruptcy.
The judge in Delaware sided with the creditors, issuing a stay to stop the company's Chicago filing while allowing it to make initial requests to keep its operations going.
Those requests were approved by a Chicago judge, some on an interim basis.