Caesars Entertainment Corp. reached an agreement with key senior creditors on the outline of a debt restructuring plan that includes a prearranged bankruptcy for its largest unit as soon as January, according to two people with knowledge of the negotiations.

Under the plan being negotiated by first-lien bondholders including Paul Singer’s Elliott Management Corp. and Pacific Investment Management Co., the casino company would put its Caesars Entertainment Operating Co. unit into Chapter 11 proceedings as soon as Jan. 14, said the people, who asked not to be identified because the discussions are private.

The proposal, which is the product of eight weeks of talks between the casino operator and its creditors, would help tame a $22.9 billion debt burden taken on six years ago in one of the biggest leveraged buyouts ever. The company needs the support of the creditor group in order to impose a reorganization that may offer little recovery for lower-ranking creditors.

Caesars, taken private by Leon Black’s Apollo Global Management and TPG Capital for $30.7 billion in 2008, has lost money every year since 2009. It has been trying to remain solvent ever since by refinancing debt and shuffling assets.

A mid-January filing would give enough time to assure the senior creditors that they could receive cash pledged by the company last month without being challenged by warring creditor groups in bankruptcy proceedings, the people said. A transfer of assets, including a pledge on cash, needs to be done at least 90 days before a Chapter 11 filing.

“They have to make first-lien creditors believe it’s going to be really safe when they file,” Ronald Mann, a professor at Columbia University Law School, said in a telephone interview. “The creditors have a lot of control here. If they can’t get first-lien creditors to go along, they have a real problem.”

Gary Thompson, a spokesman for Las Vegas-based Caesars, Francis McGill, a spokesman for Apollo at Rubenstein Associates Inc., and Lisa Baker, a spokeswoman for TPG at Owen Blicksilver PR Inc., declined to comment on the restructuring talks. Stephen Spruiell, a spokesman for New York-based Elliott, declined to comment. Dan Tarman, a spokesman for Newport Beach, California- based Pimco, didn’t respond to messages left for comment.

To contact the reporter on this story: Laura J. Keller in New York at lkeller22@bloomberg.net. To contact the editors responsible for this story: Shannon D. Harrington at sharrington6@bloomberg.net. 

Photo Credit: A general view shows the empty streets outside The Caesar's Casino in Atlantic City, New Jersey, August 26, 2011. Jason Reed / Reuters