Will Caesars (CZR) Stock be Affected by $6 Billion Lawsuit?

NEW YORK (TheStreet) -- Caesars Entertainment Corp. (CZR) has been struck with a more than $6 billion lawsuit by note-holder representatives who are the lone creditors supporting the casino operator's plan to fix its $18 billion debt, Reuters reported.

The lawsuit was filed on Monday in a Manhattan federal court and is looking to collect damages equal to the outstanding principal and interest on at least $6.3 billion in first-lien notes that were issued by the company's operating unit. The unit filed for bankruptcy back in January.

UMB Bank, the indentured trustee for some issuances of first-lien notes, and not the actual shareholders, brought the lawsuit against Caesars, Reuters said.

The company is already in the process of defending itself against several lawsuits that are accusing Caesars of inappropriately benefitting from the transfer of the best casinos from the operating unit over the past several years, Reuters added.

On Tuesday evening Caesars responded to the UMB Bank lawsuit by issuing a statement on its website.

"Caesars Entertainment Operating Company has acknowledged to the holders of first lien notes who are party to its Restructuring Support Agreement (RSA) that UMB Bank is not a party to the RSA and, therefore, the filing of the lawsuit by UMB Bank does not terminate the RSA, which remains in effect. CEOC has been advised by the RSA parties that UMB Bank is acting independently as a fiduciary and not at the direction of the note-holders that are party to the RSA."

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