Image source: Caesars Entertainment

The bankruptcy drama continues to unfold for Caesars Entertainment (CZR). Based on the most recent ruling by the judge overseeing negotiations, it looks like Caesars may actually get out of this fiasco intact, though there are still months of legalese and uncertainty ahead. 

It appears that some investors are getting interested in the casino operator again. Shares rose as much as 40% in mid-September on news that a deal was at hand, though the stock has since given up a large portion of those gains. Here's why, regardless of how Caesars' bankruptcy case comes out, its stock still doesn't look like a good play.

Caesars bankruptcy update

Caesars has a history of leveraged buyouts and taking on debt for development that left it with nearly $24 billion in total debt by 2013. As the casino company's growth prospects waned and its debt became crushing, then-CEO Gary Loveman began a plan to shuffle much of this debt to subsidiary Caesars Entertainment Operating Co. (CEOC), which in 2015 was put into Chapter 11 bankruptcy protection. As expected, creditors at risk of losing their money were not pleased, and they've have been fighting Caesars in court ever since.

On Sept. 27, Caesars announced that it had struck a deal with the majority of creditors in the case: a $5 billion agreement that would partially repay those creditors and allow CEOC's restructuring to move forward. Unfortunately for Caesars, one of the most vocal creditors in the group -- a relatively small player called Trilogy Capital Management -- continued its public legal battle, asserting that what Caesars had done to dodge its debts was illegal, and that letting the company off this easy would set a bad precedent. 

On Oct. 5, the judge presiding over the case halted Trilogy's lawsuit along with all further litigation, claiming that those smaller suits could "derail" the entire $5 billion agreement. Trilogy has already lodged an appeal for a Dec. 5 hearing to try and continue its lawsuit, but the judge's injunction is likely to extend through January to allow the settlement to go through. Caesars management called its restructuring agreements with creditors a "key milestone," writing in an Oct. 5 press release: "Today's announcement paves the way toward a confirmable plan for the Debtors and a successful conclusion to CEOC's bankruptcy proceedings in 2017." The agreements hinge on certain conditions, including the injunction staying in place. 

Image source: Caesars Entertainment

Caesars still looks like a poor bet

If things do go smoothly from here on out, CEOC will be split into an operating company and a separate real estate investment trust, and  parent company Caesars Entertainment will be able to put this legal battle behind it and move ahead with far less debt than before. At that point, Caesars could begin refocusing on its business operations. 

Narrowly avoiding bankruptcy, however, does not give a business a compelling investing thesis. While Caesars has been stuck in its legal battles, better-performing companies like MGM Resorts International (NYSE: MGM), Wynn Resorts (NASDAQ: WYNN), and Las Vegas Sands (NYSE: LVS) have been dominating the areas that would be Caesars' growth opportunities. In Las Vegas, MGM has successfully grown and now controls more than half of the hotel rooms on the strip. Wynn Resorts recently announced that it will be expanding its resort there to include a giant water attraction and another 1,000-room hotel tower. Caesars has virtually no properties outside of the U.S., and its domestic locations outside of Nevada look lackluster at best. 

Caesars is currently in a low place, so there could be upward potential if the company can put this bankruptcy filing behind it and focus on growing once again. However, there is very little evidence that the company will be able to actually deliver that growth. The better bet now is probably to place your money elsewhere.