Trump Entertainment Judge Set to Rule on Dropping PensionMichael Bathon
Trump Entertainment Resorts Inc., the bankrupt Atlantic City, New Jersey, casino owner, is set to learn whether it can immediately withdraw from a union pension, a linchpin to its plan to avoid shutting down and liquidating its assets.
U.S. Bankruptcy Judge Kevin Gross yesterday in Wilmington, Delaware, set a phone hearing for today at noon to say whether he has the authority to let the company stop making payments to the pension fund and whether the casino operator has satisfied the requirements to withdraw.
Trump Entertainment can’t afford the pensions and exiting the fund, as well as obtaining other concessions from its union, are “absolutely critical” and needed immediately to make its restructuring work, Kristopher Hansen, a lawyer for the company, told Gross.
The union argued that the bankruptcy court lacks authority over the dispute, which should be handled by the National Labor Relations Board. Lawyers for the union also said the pension issue should be determined as part of the larger request by Trump Entertainment to scrap the collective bargaining agreement, which is set to be heard at an Oct. 14 hearing.
The union concessions are necessary to get lenders controlled by billionaire Carl Icahn to invest $100 million in a reorganized Trump Entertainment, and swap its $292 million in debt for 55 percent of new equity and some new debt, the company has said in court filings. Trump Entertainment must also persuade local and state governments to cut its property taxes.
“We’re not here to restructure this company off the back of our employees,” William H. Hardie, Trump Entertainment’s financial adviser, testified yesterday.
While the union was spared in two previous bankruptcies, “the labor costs just simply aren’t sustainable anymore,” and this time “it’s a shared sacrifice,” with about $13 million in unsecured trade debt taking a cut as well, he added.
The company, which is trying to avoid closing its Taj Mahal casino next month, said in court filings that the union contract costs about $15 million a year in health, welfare and other benefits and $5 million in pension payments.
Trump Entertainment, which owns two properties in Atlantic City, closed the Trump Plaza last month and said it may shutter the Taj Mahal by mid-November if it can’t cut costs.
Atlantic City began with 12 casinos this year and the Taj Mahal would be the fifth to close in 2014. The city has been losing business to other eastern U.S. states.
Donald Trump, the real-estate tycoon and reality-TV star who founded the company, began investing in Atlantic City in the early 1980s. He has no involvement in Trump Entertainment now.
The case is In re Trump Entertainment Resorts Inc., 14-12103, U.S. Bankruptcy Court, District of Delaware (Wilmington).