Trump Entertainment Wins Approval to Seek Vote on Icahn PlanMichael Bathon
Trump Entertainment Resorts Inc., the bankrupt New Jersey casino company, won court permission to seek a creditor vote on a proposal to hand control of its Atlantic City assets to a lender group led by billionaire Carl Icahn.
U.S. Bankruptcy Judge Kevin Gross in Wilmington, Delaware, Wednesday approved disclosure materials explaining the plan to creditors.
The judge also authorized the company to tap $20 million in bankruptcy financing from the Icahn lenders to keep the Taj Mahal casino open while seeking approval of the reorganization. The company’s other casino, the Trump Plaza, is already closed as Atlantic City loses gambling business to neighboring states.
There’s “no question the financing is critical, and that the loan is new money,” necessary to the restructuring, Gross said at the hearing.
A committee of unsecured creditors that includes representatives of a casino workers’ union told the judge the plan isn’t feasible and the reorganized company wouldn’t be viable.
“The plan is totally a money-loser and subject to the lenders’ whim to provide more financing,” said Karen A. Giannelli, a lawyer for the creditors.
While the judge said he shared many of the creditors’ concerns and will consider them at the plan-approval hearing, he overruled the committee’s objections.
“The company will have a very difficult time with the issues that the committee has raised,” Gross said. “But there would be no lending without the disclosure statement approval, and that would in essence terminate the case.”
Under the plan, the Icahn lenders would get control of the two casinos through a conversion of debt into equity in the reorganized company. Unsecured creditors would receive almost nothing, according to court papers.
The unsecured creditors on Tuesday asked for court permission to sue the Icahn group, saying some of the lenders’ claims on the company’s assets aren’t valid. The committee said a successful lawsuit could generate “tens of millions” of dollars in value for its constituents.
Trump Entertainment filed for bankruptcy Sept. 9 and shut the Trump Plaza days later. Four Atlantic City casinos closed last year.
The case is In re Trump Entertainment Resorts Inc., 14-bk-12103, U.S. Bankruptcy Court, District of Delaware (Wilmington).