By Katherine Hyunjung Lee

In what he described as a “monumental” case, Judge A. Benjamin Goldgar of the U.S. Bankruptcy Court in Chicago approved on Tuesday the chapter 11 reorganization of Caesars Entertainment Operating Company, closing the $18 billion bankruptcy case that began two years ago.

Caesars Entertainment Operating Co., a wholly owned subsidiary of Caesars Entertainment Corp., operates two casinos in the state of Illinois and two in Indiana. Eighteen properties belonging to CEOC were included in the chapter 11 filing. The company operates 47 casinos in all.

Under the reorganization, CEOC will separate its U.S. based real property assets from its gaming operations, transferring its real property assets to a new real estate investment trust owned by CEOC’s creditors. CEOC will not have any equity interest in the REIT.

CEOC will also merge with Caesars Acquisition Co., another wholly owned subsidiary of Caesars Entertainment Corp. The successor of the merger will hold all of CEOC’s assets other than the assets to be owned by the REIT or distributed to claim holders.

The reorganized CEOC’s market debt of $1.2 billion will be syndicated to third parties, with prospective proceeds being paid in cash to lenders and noteholders.

CEOC’s long bankruptcy filing process has included legal battles with creditors, settlements with junior creditors and, most recently, an objection from the U.S. Trustee regarding releasing the parent company’s potential liability. The U.S. Trustee withdrew the objection last Friday, resulting in the final confirmation hearing on Tuesday.

Reorganization could begin as early as June, but might be delayed until September, Joe Graham, attorney for CEOC, said in court hearings on Tuesday.