Caesars bankruptcy includes 2 A.C. casinos

The bankruptcy filing Thursday in Chicago by Caesars Entertainment Corp.'s largest unit includes Caesars and Bally's on the Atlantic City Boardwalk, but not the Harrah's casinos in Chester and Atlantic City.

All Caesars properties included in the bankruptcy remain open.

"With the overwhelming support of our first-lien bondholders, we are moving forward to implement our previously announced restructuring plan," Caesars chief executive Gary Loveman said.

The long-anticipated filing by the Las Vegas gambling giant sets up a jurisdictional fight. Junior creditors filed an involuntary petition Monday in Wilmington in a bid to get better terms for themselves.

In both cities, judges held hearings in the Caesars Entertainment Operating Co. (CEOC) cases.

In Wilmington, U.S. Bankruptcy Judge Kevin Gross decided to allow a Chicago judge to hear certain routine motions, such as one allowing the company to continue paying employees, but issued a stay on other proceedings in Chicago.

Gross said he planned to hold a trial Jan. 26 and 27 on the questions of jurisdiction and the validity of the involuntary petition, Bloomberg News reported.

Meanwhile, in Chicago, U.S. Bankruptcy Judge A. Benjamin Goldgar declined to assert jurisdiction over the case, involving one of the largest leveraged buyouts in history.

Private-equity giants Apollo Global Management L.L.C. and TPG Capital led the buyout of Caesars for $30.7 billion in early 2008, just as the U.S. economy collapsed. The deal included $24 billion in debt.

The debt load remains high. Filings in Chicago showed that CEOC had $18.4 billion in debt compared with $12.35 billion in assets.

The unit accounted for $5.4 billion of Caesars Entertainment's overall $8.4 billion in net revenue for the 12 months ended Sept. 30.

During the same period, CEOC's Atlantic City casinos - Bally's, Caesars, and the now-closed Showboat - had $825 million, or 18 percent, of CEOC's $5.4 billion in net revenue.

In months-long negotiations, Caesars reached a deal with creditors who own first-lien notes amounting to 80 percent of the $6.3 billion outstanding. Under the agreement with those key lenders, CEOC's overall debt would be slashed by about $10 billion, to $8.4 billion.

That would cut the company's annual interest payments by 75 percent, to $450 million from $1.7 billion, Caesars said.

In significant part because of deals that transferred the more profitable Caesars casinos to related entities that are not part of the bankruptcy, CEOC is expected to report 2014 operating profits of less than $1 billion, compared with more than $2 billion of interest expense.

Harrah's Atlantic City is part of a separate Caesars entity, Caesars Entertainment Resort Properties, which has not filed for bankruptcy protection. Caesars typically includes Harrah's Philadelphia under the CEOC umbrella, but the company does not own 100 percent of the Chester casino, thus keeping it out of the filing.