Caesars Entertainment Operating Co., Inc., et al. v. Bokf, N.A., et al. (In re Caesars Entertainment Operating Co., Inc.)

Caesers Entm’t Operating Co., Inc. v. BOKF, N.A., et al. (In re Caesers Entm’t Operating Co., Inc.), Case No. 15-3259 (7th Cir. December 23, 2015).
Bankruptcy Code section 105(a) gives bankruptcy courts extensive equitable powers to enter orders that are appropriate to carry out the provisions of the Bankruptcy Code and whether a given order is appropriate is a factual determination.
Procedural context:
Appeal from the District Court for the Northern District of Illinois affirming the bankruptcy court’s decision refusing to enjoin litigation against a non-debtor. The lower courts’ decisions were based on statutory interpretation which is reviewed de novo. The 7th Circuit vacated the denial of the injunction and remanded for further proceedings.
Debtor borrowed billions of dollars to finance its operations which borrowings were guaranteed by Caesars Entertainment Corp. (“CEC”), Debtor’s principal owner and a non-debtor. As Debtor’s financial position worsened, CEC began selling Debtor’s assets to eliminate its guaranty obligations. The beneficiaries of the guaranties sued CEC seeking about $12 billion in damages. Debtor asserted fraudulent transfer claims against CEC. Debtor sought to temporarily enjoin the guaranty litigation against CEC fearing that the litigation would thwart its multi-billion dollar restructuring effort since it could reduce the amount it could recover from CEC. The bankruptcy court held that it did not have the authority under § 105(a) because the guaranty litigation did not arise out of the same acts that gave rise to Debtor’s claims against CEC. The 7th Circuit held that § 105(a) had no such limitation.
Posner, Manion, Sykes (Posner)

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