Caesars bankruptcy venue decision near

LAS VEGAS - Wilmington or Chicago: Troubled casino giant Caesars Entertainment Corp. should find out early next week where a subsidiary's Chapter 11 bankruptcy case will be decided.

Caesars prefers Chicago, where its Caesars Entertainment Operating Co. filed for bankruptcy protection Jan. 15. Three creditors prefer Delaware, where they are trying to push the debt-heavy unit into involuntary bankruptcy and prevent it from proceeding with its own plan.

A Delaware judge is set to decide the venue by Tuesday. Caesars' Chicago bankruptcy filing includes the Caesars and Bally's casinos on the Atlantic City Boardwalk, but not the Harrah's casinos in Chester and Atlantic City. All the properties remain open.

"Clearly, venue matters," said Anthony Casey, an assistant law professor at the University of Chicago who specializes in bankruptcy law.

The biggest difference might be a debtor's chances of limiting lawsuits against both the parent company and its owners, Casey said. Based only on previous cases, that may be easier to do in Chicago than in Delaware, he said.

Caesars has said it sought Chicago because it owns several casino-hotels in the Midwest.

The decision foreshadows what could be a lengthy court fight.

Some first-in-line bank lenders announced this week they had formed a committee to oppose the company's months-long negotiated bankruptcy plan other creditors had agreed to.

The plan would shed $10 billion in debt from the operations division, leaving it with $8.6 billion and reducing its annual $1.7 billion in interest payments to $450 million. Senior creditors who approved the plan would get cash and new debt.

Fitch Ratings analysts say Caesars also faces legal scrutiny of its actions if a recent ruling against it in New York is any clue.

A federal judge there ruled Jan. 15 that Caesars may have violated the Trust Indenture Act by selling off assets and stripping away investors' guarantees without their approval. Unsecured creditors involved in the lawsuit are owed $530 million, according to the company's financial filings.