Millions on the line as Chicago judge hears bankruptcy case

Timing is everything, especially when it comes to filing bankruptcy. In Illinois and across the country, the date of filing for Chapter 11 and other types of bankruptcy plays an important role in determining when creditors can no longer collect funds. As a recent incident demonstrates, a discrepancy over just a few days can cost a company millions of dollars.

Caesars Entertainment Corp’s bankruptcy case is worth $18 billion and is fraught with disputes. In one battle, the company’s private equity owners have been accused of transferring properties beyond creditors’ illegally reach prior to the filing. In another case, an Illinois judge will have to determine if lawsuits that creditors have brought against the casino operator’s parent company will be stayed.

One current issue puts a $468 million deal at stake. According to the law, creditors can seek payments from transactions that occurred up to 90 days before the bankruptcy filing. Reuters reports that in October of last year, Caesars agreed to a deal that granted the company’s senior creditors a lien on $468 million. Roughly 90 days later, on Jan. 12, several hedge funds filed a petition for involuntary bankruptcy against Caesars. The company’s operating unit filed for Chapter 11 bankruptcy in Chicago just three days later.

A judge will now have to determine when Caesars’ bankruptcy actually began. If it is marked for Jan. 12, creditors will be able to challenge the $468 million deal. If the judge opts for Jan. 15, the deal would be part of the company’s faltering restructuring and therefore have more protection from a dispute. Any business owner contemplating bankruptcy should consult with an attorney.

Source: Reuters, “Caesars casino operator, creditors face off over bankruptcy date,” Tracy Rucinski, Oct. 2, 2015

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