Another Plot Twist In Caesar's Debt Drama; Here's What We Know So Far

Here is the background the story.

Bloomberg reported on October 29, 2014, that a multi-billion dollar hedge fund called Perry Corp walked away from talks with Caesars to restructure nearly $20 billion worth of the casino operator's debt.

Caesars has been operating with a loss every year since 2009, and Perry Corp is one of the largest creditors to Caesars.

Not even a full month later, Silver Point Capital, another creditor to Caesars, also exited talks to restructure the company's debt. Bloomberg noted the hedge fund is "at least the second lender" to walk away from the negotiating table.

Related Link: Here's Why Caesars Entertainment Is Down 15%

A group of bondholders filed papers in May of this year asking a bankruptcy judge for the right to sue Caesars and its private equity investors, including Apollo Global Management and TPG.

The bondholders are suing Caesars for reneging on the guaranty of bonds, which were issued by Caesars' operating unit, Caesars Entertainment Operating Co (CEOC), which filed for bankruptcy in January 2015 with $18 billion in debt.

The bondholders are also claiming that Caesars and its backers improperly moved assets out of the operating unit prior to officially declaring bankruptcy.

The Plot Thickens

Here is where the story gets complex. As previously noted, Apollo Group is a parent company of Caesars, so CEOC sued its parent company, Caesars Entertainment, and its parent's owners, Apollo Global and TPG. Bloomberg noted the strategy would give CEOC better control over any litigation process by "bringing a watered-down version of the same claims."

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Shares of Caesars Entertainment plunged as much as 20 percent early Monday morning after a U.S. judge ruled CEOC can no longer protect its parent company Caesars Entertainment from lawsuits concerning bonds issued prior to the January 2015 bankruptcy announcement.

However, on late Monday evening, Caesars won a two-week extension on a shield from lawsuits after a different court allowed the cases to proceed.

As noted by Reuters, a U.S. judge extended the temporary halt on lawsuits against Caesars until October 5.

The current injunction on the lawsuits, expired Monday, leaves Caesars Entertainment as well as its shareholders at risk.

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