Involuntary bankruptcy for caesars?

[Alan Mendelson]

For the most part, the discussion about a bankruptcy for Caesars has been about a voluntary bankruptcy. I haven't seen any discussion about an involuntary bankruptcy and could that be what will happen?

In an involuntary bankruptcy the creditors would go to bankruptcy court to have the court take control of Caesars -- which would mean putting it under a creditors committee.

In a voluntary bankruptcy, Caesars would go to court itself with the idea of asking for the court's help in restructuring its debts.

The difference between an involuntary bankruptcy and a voluntary bankruptcy might be how the company is run.

My fear is that in an involuntary bankruptcy there could be less concern for the customers and players and for the players who have a stake in the continuation of the Total Rewards program.

In a voluntary bankruptcy, Caesars management would make a deal with its creditors to operate. These are often call "pre-packaged bankruptcy plans" and could cause the fewest restrictions on the company -- in this case Caesars, the debtor.

The report in Friday's Las Vegas Review Journal leads me to believe that some of the creditors of Caesars are likely to seek their own involuntary bankruptcy petition. See the article here: http://www.reviewjournal.com/busines...ructuring-debt

Note that there is one group of analysts who say the case is too big and too complicated for a pre-packaged bankruptcy plan.

The article also seems to make it a certainty that some sort of bankruptcy case will be filed in January -- but again it seems to indicate a voluntary or packaged bankruptcy with the support of creditors.

I wonder if there could be a surprise bankruptcy -- an involuntary bankruptcy -- that could cause immediate and drastic changes including changes to marketing and Total Rewards which would immediately impact customers?

Do you still want to hold on to your Reward Credits and unused comps now?

Another question is why would anyone hold shares of Caesars (now about $12) with a bankruptcy looming? Does anyone think the stock will survive?

[spojoey]

Another question is why would anyone hold shares of Caesars (now about $12) with a bankruptcy looming? Does anyone think the stock will survive?

Stock investors don't get a final accounting until a bankrupt company files a disclosure statement, which details the terms of recovery for each class of creditor and announces whether existing shareholders get anything. Until then, the stock continues to trade as secured creditors and unsecured creditors fight over the company's worth and investigate potential lawsuits that could bring money into the bankrupt estate. Some investors bet on the stock, while those who sold it short—borrowing shares and selling them, hoping to buy them back later at a lower price—unwind their positions. Purchases by short sellers can sometimes lead to a temporary runup in price.

[Alan Mendelson]

I admit I have limited knowledge about stocks of bankrupt companies but in all cases I know of the common stock went to zero. Is there a BK where the common stock didn't get wiped out?

[RoeIncarnate]

I admit I have limited knowledge about stocks of bankrupt companies but in all cases I know of the common stock went to zero. Is there a BK where the common stock didn't get wiped out?

I guess you could hope for a bear sterns monument. Although that seems unlikely.

[Alan Mendelson]

Caesars skipped an interest payment on Monday the 15th but has a 30-day grace period. That might mean a bankruptcy filing on January 15.

See this article in the Las Vegas Review Journal: http://www.reviewjournal.com/busines...terest-payment

[Dan Druff]

It's just the first step in their process to shuffle their bad debt over to the sacrificial lamb spinoff company they created (Caesars Entertainment Operating Company).

Provided they don't lose the lawsuit against them regarding this effort, I wouldn't worry too much.

Here is a detailed writeup of the situation: http://www.flushdraw.net/news/caesar...-bond-payment/