New information is available in the ongoing saga known as the Trump Entertainment bankruptcy. Trump needs around $5 million in financing to emerge from bankruptcy and Carl Icahn looks to be the only person willing to foot the bill. Also, the company has come to terms with Atlantic City on back taxes.
The big news over the weekend centered on the announcement that Icahn has agreed to concessions to the Local 54 of the Unite-HERE union. The parties are still waiting for an official reaction from the union, but in the meantime, Trump Entertainment is working to keep control of their company. A Delaware bankruptcy judge will determine next week whether the company will be allowed to proceed with its Chapter 11 reorganization or if they will be forced into Chapter 7 liquidation.
Icahn to Provide Bankruptcy Financing
Trump Entertainment has been struggling to pay its bankruptcy-related bills, so the man known as the “de-facto owner” of the Taj has stepped in. According to Philly.com, Icahn has agreed to loan Trump Entertainment up to $5 million dollars to finance their Chapter 11 bankruptcy into January.
This offer is seen by some parties as a prelude to a finalized deal to keep the Taj operational. At present, the property is scheduled to close on December 12, but Icahn agreed to concessions late last week that could keep the casino open. He has agreed to restore union health care and to provide partial pension payments in exchange for the union agreeing to drop their appeal of a bankruptcy court’s decision allowing the Taj to back out the union contract.
Icahn’s loan is the only financing alternative available to the company, according to William Hardie III, managing director of Houlihan Lokey Capital. In a court filing, Hardie stated that without the additional funding, the company would not be able to emerge from Chapter 11 bankruptcy. Trump Entertainment has been using cash-on-hand to pay current expenses, but is expected to burn through their remaining funds by January 16, 2015.
Trump Entertainment and Atlantic City Agree to Terms on Taxes
Trump Entertainment and Atlantic City have come to terms on unpaid taxes, another positive sign for the company. A Delaware bankruptcy judge approved a deal on Tuesday that will see Atlantic City hold a tax sale for back property taxes owed by Trump Entertainment. The city is looking to collect up to $22 million in taxes on the defunct Trump Plaza and the Trump Taj Mahal.
As part of the deal, Trump Entertainment retains their right to appeal their 2014 tax bill. A tax sale would effectively transfer the back tax amount to another party and they would be responsible for collecting on the debt. If Trump Entertainment does not settle the tax certificate within two years, the holder can then foreclose on the property.