Trump Entertainment Resorts may actually make a run at emerging from bankruptcy. According to a report on Bloomberg.com on Thursday, the unsecured creditor’s panel has reached a deal with Trump Entertainment that will immediately resolve disputes over the company’s restructuring plan and will help the company to emerge from bankruptcy.
Originally, the unsecured creditors objected to the current reorganization plan in place by lenders because they were to only get a split of $1 million. This equaled less than one percent of total debts owed. In the new negotiation, the fund to pay those creditors has been increased to $3.5 million.
Creditors Will Stand Down from Litigation But Union Appeal Remains
According to Karen A. Giannelli, lawyer for the unsecured creditor’s committee, the settlement allowed them to support the restructuring plan in place. This plan will give primary debt holder Carl Icahn complete control of the Trump Taj Mahal casino in Atlantic City. Icahn brokered a similar deal to take over the Tropicana Casino and subsequently turned them profitable.
Gianelli also stated that the increase of the fund to $3.5 million will prompt creditors to “stand down on all of the litigation” and they will cease all investigations. The creditors had been suing to invalidate certain lenders claims in order to increase member recovery.
Despite the settlement by the committee, Gianelli did state that the settlement did not obligate any specific member to support the plan. This is important because the Unite Here Local 54 union is part of this committee. Furthermore, the agreement has no impact on their appeal of their labor agreement.
As part of a plan to save the Trump Taj Mahal, Trump Entertainment had a bankruptcy judge invalidate the union’s contract. The union has appealed the decision and seeks to have it overturned. Icahn has attempted to negotiate a settlement with the union but all attempts have fallen through.
Trump Taj Appears Safe to Remain Open for Foreseeable Future
Thanks to a combination of funding from Icahn and this agreement from the unsecured creditors, it appears that the Trump Taj Mahal will be able to remain open indefinitely in order to resolve its matters with the union and eventually emerge from bankruptcy.
The casino is also in the middle of several cost saving moves, including the recent closure of their poker room. The Taj poker room had been losing the casino money and they have shut it down until at least July in order to renovate it. Odds are a smaller room will reopen to reduce costs.
The Trump Taj Mahal was scheduled to close multiple times in December 2014 but both times Icahn stepped up with funding to keep the property open. The Taj is the last property still operating under the Trump Entertainment umbrella and narrowly avoided becoming the fifth Atlantic City casino to close during the year. The Trump Plaza shut down following the company filing bankruptcy in 2014.
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