T 201 567 7377
F 201 567 7337
T 212 905 0509
F 212 905 0508

info@gardylaw.com 560 Sylvan Avenue
Englewood Cliffs, NJ 07632
Tower 56
126 East 56th Street
New York, NY 10022

News


Federal District Court upholds claims that Caesars Entertainment Corporation violated the Trust Indenture Act of 1939, breached the governing note indenture and implied covenant of good faith and fair dealing in stripping the corporate parent guarantee from Caesars Entertainment Operating Corporation bonds
January 29, 2015

Gardy & Notis, LLP is co-lead counsel for bondholders who own 6.50% Senior Notes due 2016 issued by Caesars Entertainment Operating Corporation (CEOC) and guaranteed by Caesars Entertainment Corporation (CEC).The 2016 Senior Notes were issued by CEOC pursuant to a June 9, 2006 indenture.The complaint alleges that CEOC and CEC violated the Trust Indenture Act of 1939, 15 U.S.C. §§77aaa, et seq., breached the 2016 indenture and the covenant of good faith and fair dealing when CEOC and CEC entered into a transaction to release CEC from its guarantee obligation on the 2016 Senior Notes as part of a scheme to protect CEC and its private equity sponsors ahead of a planned bankruptcy for CEOC.

On January 15, 2015 Judge Shira A. Scheindlin of the United States District Court for the Southern District of New York issued an Opinion and Order upholding all of the claims in the complaint filed by Gardy & Notis, LLP:

I find that the Complaint's plausible allegations that the August 2014 Transaction stripped plaintiffs of the valuable CEC Guarantees leaving them with an empty right to assert a payment default from an insolvent issuer are sufficient to state a claim under section 316(b)…[A]s alleged in the Complaint, removal of the Guarantees through the August 2014 Transaction is an impermissible out-of-court debt restructuring achieved through collective action.This is exactly what TIA section 316(b) is designed to prevent.

Judge Scheindlin also declined to stay the case against CEC notwithstanding the bankruptcy filing of CEOC.

The case is Frederick Barton Danner v. Caesars Entertainment Corp. et al., No. 14­cv­07973-SAS, in the United States District Court for the Southern District of New York.



Back to News Article List...
All contents copyright Gardy & Notis, LLP. All rights reserved

Attorney Advertising

Web Design - DreamingCode