Yesterday, the casino business of Caesars Entertainment Corp. met with a group of creditors in trial to determine the exact date of when the operator went bankrupt, as well as whether the company's restructuring deal could move forward.
The Las Vegas Review-Journal reported that creditors Appaloosa Management, alongside other hedge funds, urged U.S. Bankruptcy Judge Benjamin Goldgar in Chicago to rule that Caesars' operating unit, CEOC, went bankrupt on Jan. 12. These creditors allege that they filed an involuntary petition against the company in Delaware three days before the company filed a voluntary $18 billion bankruptcy petition in Chicago.
The timing of the Chapter 11 filing is under scrutiny because it could be used to determine the validity of a $486-million cash lien that Caesars granted its senior leaders in October. The lien is a major part of the company's $1.5-billion restructuring agreement, and the law allows creditors to challenge certain transactions that took place within 90 days before a bankruptcy filing. Unsecured creditors are attempting to convince Judge Goldgar that they were justified in filing the involuntary petition against CEOC on Jan. 12, that way they can further challenge the October deal.
"This is not a matter that I'm likely to decide 24 hours within the close of the case," Goldgar said at the start of Monday's trial.
This is just the latest in Caesars' recent legal trouble. In September, The Washington Times reported that Caesars Palace in Las Vegas is being fined $9.5 million by federal and state regulators for failing to take steps to prevent money laundering in the casino. The U.S. Treasury’s Financial Crimes Enforcement Network is fining the casino $8 million, while the Nevada Gaming Control Board is levying its own fine of $1.5 million against the property.
The investigation tracked actions the casino made as early as 2012, with investigators claiming the property violated the Bank Secrecy Act, allowing high rollers to gamble millions anonymously in private rooms. The casino then failed to watch for possible suspicious activity in the cash flow that followed, including wire transfers.