CHICAGO (CelebrityAccess) — Caesars Entertainment Corp. stock fell precipitously, losing almost 50% of its value on Wednesday after a ruling by a federal judge that may force the casino operator into bankruptcy.
According to Bloomberg, the ruling by U.S. Bankruptcy Judge A. Benjamin Goldgar in Chicago on Wednesday that while Caesars’ casino unit, which filed for bankruptcy in January, is shielded through an automatic stay of most litigation, the parent company is not.
“The company lost a negotiating chip,” Erik Gordon, a law professor at the University of Michigan’s business school, told Bloomberg. “They will try to chug forward with a plan. That’s going to be a very rough road full of potholes because so far they’ve not been able to get the creditors together.”
Creditors had accused Caesars of saddling the bankrupt division of the company with debt while the company's assets had been shifted to other divisions, allowing Caesars private equity investors, including Apollo Global Management and TPG Capital to retain control.
Caeser's took on more than $30 billion in debt during a 2006 leveraged buyout that proved to be one of the largest in history. – Staff Writers