No rain check for Caesars’ $11B debt

A judge on Friday ruled that Caesars Entertainment must face creditor lawsuits that could force the nation’s biggest casino operator into bankruptcy.

Caesars, backed by private equity firms Apollo Global Management and TPG Capital, had fought to extend a freeze on suits seeking to force the parent company to make good on $11 billion of debt owed by its bankrupt operating unit.

Judge Benjamin Goldgar in Chicago bankruptcy court refused to extend the stay that expires Monday. Goldgar had halted the suits to allow Caesars more time to reach a restructuring deal with creditors.

But the judge was disappointed with Caesars’ efforts to negotiate a deal.

“He called it a sham effort,” said one source at the hearing.

Goldgar found it “particularly disturbing” that Caesars hired lobbyists in a bid to get Congress to change bankruptcy laws that would have made it harder for creditors to win their suits.

Manhattan federal Judge Jed Rakoff has set a hearing Tuesday in one suit seeking to force the parent to honor the bankrupt unit’s debt. “He will decide if the guarantees should be reinstated,” the source said.

If so, Caesars has said it cannot afford to pay creditors. The company is expected Monday to file an emergency appeal to delay the Rakoff hearing, sources said.

Caesars said it was disappointed in the decision, saying it agreed to make “a substantial contribution” to help restructure the bankrupt unit and allow it to “emerge as expeditiously as possible.”

Caesars did not return calls for comment.