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Caesars Entertainment Corp. has been hit with another bondholder lawsuit as it continues negotiations to restructure its debt. A minority group of legacy bondholders sued the casino operator on Sept. 3, claiming that an agreement Caesars struck with a majority legacy bondholder group was an unfair "backroom deal" that violated their rights. An investor group led by Greenwich, Conn.-based hedge fund MeehanCombs LP filed suit against Caesars Entertainment and its operating unit, Caesars Entertainment Operating Co. (CEOC) in the U.S. District Court for the Southern District of New York, panning what it sees as the company's "preferential treatment of certain holders and attempt to eviscerate protections for remaining holders." One source familiar with the situation told The Deal's Lisa Allen that Caesars' behavior is an unwelcome throwback to the era before the Trust Indenture Act of 1939, which was passed to protect bond investors. "These defendants are trying to take us back to the early 1930s," the source asserted. Did Caesars violate the rights of its minority legacy bondholders? Sources have their own strong opinions on the matter, but ultimately, it will be up to a judge to decide whether the language in the legacy bond indentures backs up their case. Richard Collings has the details from New York. For more visit: www.thedeal.com
