Caesars rolls the dice in bankruptcy court

Casino company Caesars Entertainment (CZR), the owner of Harrah's and Harvey's in Lake Tahoe, announced early Thursday that it had filed for Chapter 11 bankruptcy protection in federal court in Chicago for its main operating unit in an attempt to beat back an effort by some creditors who filed their own bankruptcy plan in Delaware on Monday. They claim the company has cheated them.

The effort by junior creditors such as Appaloosa Investment Limited Partnership to stymie Caesars reorganization plan now comes down to a battle over which court will handle the bankruptcy. The Delaware judge who's handling the case, Kevin Gross, said he'd consider the creditors' request to halt Caesars Chicago filing only after Caesars actually files it, but as soon as possible thereafter.

Caesars plans to operate its casinos, including Caesars Palace in Las Vegas, as usual as it restructures its debt, which comes from a $29 billion 2008 leveraged buyout of the casino operator by TPG Capital and Apollo Global Management.

Under its bankruptcy plan, Caesars would slash the debt of Caesars Entertainment Operating Co. to $8.6 billion from $18.6 billion. The company also plans to convert Caesars Entertainment Operating Co. into a real estate investment trust (REIT).

In a filing with U.S. Bankruptcy Court in Delaware, attorneys for the Las Vegas-based company argued that the creditors' attempt to stop its planned reorganization would "wreak havoc on the orderly process the debtors, their professionals, and the many consenting stakeholders have been preparing for months to protect the debtors' business for the benefit of all creditors."

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