The Delaware Court of Chancery has rejected a motion by various Caesars Entertainment entities to dismiss a lawsuit that raises allegations the companies diverted their strongest assets to other related companies in advance of filing for bankruptcy.
Wilmington Savings Fund Society, the trustee of billions of dollars in secured notes for Caesars Entertainment Operating Co., alleged CEOC spent the years preceding its January 2015 bankruptcy filing racking up more than $25 billion in debt despite the significant economic hardship facing the gaming industry. And then CEOC looked to move its strongest assets to related companies before filing for bankruptcy, leaving creditors like Wilmington Savings left with little to collect on in the bankruptcy proceedings, the trustee alleged.
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