Caesars senior lenders seek receiver, claim unit looted

A Caesars Entertainment Corp. creditor group said managers should be stripped of control of the casino company’s operating unit because they looted the subsidiary of more than $4 billion of assets.

UMB Bank, trustee for first-lien noteholders owed about $1.25 billion, sued Caesars on Tuesday in Delaware Chancery Court, repeating allegations made by junior creditors in August. Both groups of creditors have assailed Caesars’ directors, including David Bonderman, co-founder of buyout firm TPG Capital, and officials of Apollo Global Management LLC.

TPG and Apollo took Caesars private in a $30 billion leveraged buyout in 2008 that loaded the gambling company with more debt than it can handle. Since then the new owners have stripped Caesars Entertainment Operating Co. of its most valuable assets, including casinos on the Las Vegas Strip, creditors say.

Bonderman and the other directors “have thoroughly ransacked CEOC in a sweeping and now transparent plan to take CEOC’s prime assets for themselves and leave its liabilities and creditors behind,” according to Tuesday’s filing.

Caesars has said its largest division won’t have enough cash to repay debts by the fourth quarter of 2015 if it can’t restructure its obligations through refinancing, creditor negotiations or bankruptcy.

“The claims in this lawsuit are baseless and that this filing is an attempt to derail constructive talks the company is having with creditors concerning a restructuring of CEOC,” said Stephen Cohen, a spokesman for the Las-Vegas based company at Teneo Holdings LLC.

Owen Blicksilver, a spokesman for Bonderman, said in a phone interview that he couldn’t immediately comment on the lawsuit.

The case is UMB Bank v. Caesars Entertainment Corp., CA NO. 10393, Delaware Chancery Court (Wilmington).