Harrah’s hit with class-action lawsuit over debt plan
Posted by: Bud Stoddard on Mon, Feb 16, 2009Share this post
Add Harrah’s Entertainment Inc. to the list of Las Vegas gaming companies facing class-action lawsuits filed by securities lawyers.
Harrah’s was sued last month in U.S. District Court in Delaware by two bondholders who claim a recent debt-exchange deal engineered by Harrah’s benefited some big corporate bondholders while placing other classes of bondholders in jeopardy, should Harrah’s default on its debt or file for bankruptcy protection.
Harrah’s is “on the verge of bankruptcy, debt default and other events of insolvency,” the lawsuit charges.
“In an effort to ensure that only a limited class of individuals and entities reap the rewards of their debt investments in Harrah’s to the detriment of other investors, defendants have completed bond tender offers that benefit those select individuals and entities to the exclusion of all others. Without any lawful justification for cherry-picking among its investors, defendants’ bond tender offers have allowed those elite individuals and entities to obtain newly-issued bonds that will take priority over and otherwise subordinate previously-issued bonds of the exact same category,” the lawsuit states. Read the rest of the story…