Caesars Entertainment Operating Co. asked the bankruptcy court overseeing its Chapter 11 proceeding to extend the exclusive period during which only the company could file a reorganization plan through Nov. 15, saying its case was “among the largest, most complex and highly litigious restructurings in recent history.”
The company is also seeking to extend the corresponding exclusive period to solicit votes to a reorganization plan through Jan. 15, 2016.
The company said that while its case was still in its “infancy,” it had nonetheless “already made significant progress toward a successful restructuring,” citing, among other things, its venue fight in Wilmington, Del., its largely consensual first day motions, successfully negotiating an adequate protection agreement, and its restructuring support agreement, which was reached prior to the Chapter 11 filing.
“But,” the company added, “significant work remains to achieve confirmation of a Chapter 11 plan, whether it is the plan [contemplated by the RSA] or another proposed by the debtors.”
First, the company said, the examiner that has been appointed in the case must complete his report. As reported, New York-based attorney Richard Davis was approved as the examiner on March 25 (see “Richard Davis nets court OK as Caesars bankruptcy examiner,” LCD, March 26, 2015). His investigation is anticipated to cover a wide range of issues related to potential fraudulent conveyance and other avoidance actions in connection with numerous pre-petition transactions undertaken by the company in advance of its bankruptcy filing.
The bankruptcy court did not set a deadline for the investigation, and according to the company’s exclusivity motion, the investigation could take “six months or longer.”
The company said that the parties in the case “generally have requested that the [company] not proceed with a disclosure statement hearing on the plan until the examiner has issued his report,” adding, “[a]ccordingly, the debtors have not moved forward with the plan confirmation process.”
Meanwhile, the company said, it needs time to continue to build support for its plan among creditors, noting that it is continuing to negotiate with its first lien bank lenders and other stakeholder regarding the RSA.
In this regard, the company laid out its strategy.
“If the debtors can successfully negotiate a revised RSA that is supported by more than two-thirds in dollar amount of both first lien bank and bond debt, it would be a key milestone in these cases and solidify support from a supermajority of the top of the debtors’ capital structure,” the company said. “The debtors would then be able to turn their attention in earnest towards their junior creditors — represented by two official committees — to try to obtain their support for a plan supported by the senior bank and bond group.”
Further, the company said, it had decided to market test its proposed reorganization plan by soliciting plan overbids to the plan. The company’s independent Governance Committee would oversee this process, the company said, noting that it would take months to design, implement, and complete – and that is even before any alternative plan would have to face regulatory or bankruptcy court approvals.
Fourth, the company also noted that a trial is set for Aug. 3 to resolve the pending involuntary petition that was filed against the company in bankruptcy court in Wilmington, Del., on Jan. 12, three days before the company filed its own voluntary petition in Chicago. As reported, the company ultimately won its bid to have the venue of that case transferred to Chicago, and while the company has opted, as an administrative matter, to pursue its reorganization via the voluntary petition it filed, the involuntary case that was transferred from Delaware remains pending.
As reported, the determination of whether the company’s Chapter 11 began on Jan. 12 with the involuntary filing, or on Jan. 15 with the voluntary petition, could affect, among other things, the avoidability of certain transactions undertaken by the company on Oct. 15, 2014 in connection with granting first lien lenders liens in the company’s cash collateral, with the expectation that a Chapter 11 would not be filed until at least 90 days later, once the preference period had lapsed (see “CEOC involuntary Ch. 11 in spotlight again as creds aim to nix liens,” LCD, April 9, 2015 $).
According to the exclusivity motion, “[t]he grant or denial of the involuntary petition will have significant implications on the Debtors’ ability to implement the plan in its current form.”
A hearing on extending exclusivity is set for April 29, court filings show. – Alan Zimmerman