- 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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