Joel R. Glucksman
Partner
201-896-7095 jglucksman@sh-law.comFirm Insights
Judge Gross Threatens To Liquidate Trump Entertainment
Author: Joel R. Glucksman
Date: December 11, 2014
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U.S. Bankruptcy Judge Kevin Gross has questioned the reasoning for permitting Trump Entertainment to remain in Chapter 11.
When Trump Entertainment filed for protection under Chapter 11 of the bankruptcy law, it intended to restructure and go on being profitable. Now that it seems this is less likely, Gross has ordered the company to demonstrate why its Chapter 11 reorganization bankruptcy shouldn’t be converted to a Chapter 7 liquidation, according to The Wall Street Journal. This would ruin the plans of billionaire Carl Icahn, who has wanted to take the company over via a debt for equity swap. In apparently questioning Icahn’s strategy, Judge Gross cited the lack of adequate financing for Trump’s successful emergence from Chapter 11.
Under Chapter 7 of the bankruptcy law, the court appoints a trustee to make decisions for the company and sell its assets. The proceeds are then distributed to creditors. By contrast, under a proposed Chapter 11 reorganization plan, Carl Icahn and associates could take full control of the company and inject $100 million into its operations, according to Bloomberg. This proposed investment by Icahn was however conditional on the company winning the right to terminate its collective bargaining agreement with its union, as well as the securement of over $100 million from the State of New Jersey. Trump Entertainment won its court battle with the union, but this decision has been appealed. Meanwhile, state officials have suggested that they will not donate taxpayer money to the casino.
Should Trump Entertainment’s Chapter 11 bankruptcy be converted into a Chapter 7 bankruptcy, the company will lose the right to make decisions and business operations will cease. While secured debts, like those held by Icahn, will keep their top-level status, it is difficult to tell how much money would result from a liquidation or precisely how it would be allocated.
Trump Entertainment’s fall into bankruptcy has been well documented by this creditors’ rights and bankruptcy attorney. Checkout at the previous coverage to get the full story.
- Icahn: Trump Taj Mahal “Will Almost Certainly Close”
- Trump Entertainment Loses Anti-Pensioner Bid
- Trump Taj Mahal May Close Dec. 12, Union Protesting
- Creditors Angered By Trump Entertainment’s Bankruptcy Plan
- Trump Entertainment Seeks To Stop Pension Payments
- Practices: Corporate Transactions & Business, Bankruptcy & Creditors' Rights, Bankruptcy Litigation
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
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