Trump Entertainment Resorts Inc.’s Taj Mahal in Atlantic City, New Jersey, will survive as part of billionaire Carl Icahn’s empire under a bankruptcy restructuring plan approved by a federal judge Thursday.
Trump Entertainment, which also owns the shuttered Trump Plaza, adds to Icahn’s gaming venues in the downtrodden seaside town, joining the Tropicana, which the investor acquired out of bankruptcy five years ago.
“The Taj will remain open,” U.S. Bankruptcy Judge Kevin Gross said at a hearing in Wilmington, Delaware. “And it will be a successful venture.”
The decision by Gross brings a close to a bankruptcy in which Trump Entertainment found itself on the brink of liquidation multiple times. The company had threatened to close the Taj Mahal over disputes with its union.
Trump Entertainment filed for bankruptcy Sept. 9 and shut the Plaza days later. It was one of four Atlantic City casinos that closed last year as the New Jersey gambling hub was battered by competition from surrounding states.
Lenders controlled by Icahn provided Trump Entertainment $20 million in bankruptcy financing to help fund operations until the turnaround plan takes effect.
Under the plan, the Icahn lender group gets control of both casinos by converting about $292 million of debt into equity in the reorganized company. The Icahn group will also provide $13.5 million to fund the Taj Mahal after it exits court protection.
The casino owner was able to eliminate most opposition to the plan, striking a deal with unsecured creditors last month and with founder Donald Trump on Monday.
“I’m happy to have reached a deal with Carl -- a friend and someone who my father and I have great respect for,” Ivanka Trump, who helped negotiate the agreement, said in an e-mail. “The Trump Taj Mahal will, in short order, be greatly reinvested in and brought up to the high standard of luxury consistent with our brand and required under our license agreement.”
Donald Trump and his company haven’t been involved in running the Atlantic City casinos for about 10 years. Trump still holds a number of gaming licenses in the U.S., but doesn’t own or operate any casinos.
Trump Entertainment will continue to use the Trump name on the Taj Mahal, according to court filings. Donald Trump will drop a lawsuit seeking to have the name removed and support the plan as part of the accord.
Donald Trump, the real-estate tycoon and reality-TV star who founded the company, began investing in Atlantic City in the early 1980s.
Unsecured creditors agreed to back the plan and, in return, will get $3.5 million fund, increased from $1 million, court papers show.
The casino operator has been embroiled in a fight with the Unite Here Local 54, which represents more than 1,100 Taj Mahal workers, over its move to scrap the union’s labor deal. The bankruptcy court approved that request, and the union appealed.
The reorganization plan will take effect and Icahn will become owner if the appeals court upholds Gross’s decision last year to let Trump Entertainment cancel the union contract. If the court overrules Gross and reinstates the contract, Icahn has the right to back out of the takeover.
The case is In re Trump Entertainment Resorts Inc., 14-bk-12103, U.S. Bankruptcy Court, District of Delaware (Wilmington).