Joel R. Glucksman
Partner
201-896-7095 jglucksman@sh-law.comFirm Insights
Creditors Angered By Trump Entertainment's Bankruptcy Plan
Author: Joel R. Glucksman
Date: November 20, 2014
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The unsecured creditors of Trump Entertainment Resorts Inc. are expressing frustration with the company’s plan to restructure itself in bankruptcy.
Many creditors have called the restructuring plan a “charade” that will simply allow billionaire investor Carl Icahn to save hundreds of millions of dollars in tax credits, according to The Wall Street Journal. This is because, instead of securing votes from many of its creditors – as is typical after filing for protection under Chapter 11 of the bankruptcy law – the company has said that only Icahn’s vote will be considered in its decision. A Nov. 5 hearing will determine whether the court approves this voting scheme.
The “debt-for-equity” deal allows Icahn and his companies to swap some of their debt for a controlling interest in the reorganized Trump Entertainment, the Journal reported. Additionally, Icahn will invest $100 million in the struggling company. Meanwhile, unsecured creditors are expected to recoup none of their $13.5 million in debt.
According to Law360, Atlantic City is also displeased with Trump Entertainment’s Chapter 11 disclosure statement. The city argues that the restructuring plan does not address the $22 million that the company owes in unpaid city taxes.
Icahn has said that the company’s casino Trump Taj Mahal can only stay open if it receives a major aid package from the New Jersey government, but this appears to be unlikely at this stage.
The unsecured creditors’ complaints call the plan “patently unconfirmable,” the Journal reported. This is because it proposes to allow the company to exit bankruptcy even if its only remaining property – the Taj Mahal – is closed.
“The court should not devote its time and resources…to a plan process that is dead on arrival,” the objection says, according to the news source. Trump Entertainment attorneys did not respond to Journal requests for comment.
The resort owned by Donald Trump has been in hot water for some time now. So why not check out some of my previous posts regarding this hotel/casino’s bouts with bankruptcy:
- Trump Entertainment Loses Anti-Pensioner Bid
- Judge Allows Trump Taj Mahal To Void Union Contract
- Taj Mahal Casino of Atlantic City May File For Bankruptcy
- Trump Entertainment Seeks To Stop Pension Payments
- Practices: Bankruptcy & Creditors' Rights
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
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