A bankruptcy judge has approved a plan that would allow billionaire Carl Icahn to gain control of Atlantic City’s Trump Taj Mahal.
And no sooner than that was announced, Taj Mahal workers began picketing outside the casino and protesting the move.
Judge Kevin Gross has approved the plan that would allow Icahn to assume ownership of the casino and the closed Trump Plaza casino in exchange for more than $290 million in debt he holds against Trump Entertainment.
However, the entire deal could collapse if the city’s casino workers unions win an appeal of Gross’ previous ruling scrapping the Taj Mahal’s union contracts.
The approval does come after Icahn struck a deal with Donald Trump to keep the Trump name on the property.
Though Trump Entertainment bears his name, Donald Trump controls only about 5 percent of the company. He had been suing to have his name removed from the Taj Mahal—his name has already been removed from the Plaza—saying that the company had allowed the property to deteriorate and it now hurt his brand.
As part of the takeover, Icahn has pledged to invest about $100 million into the property and to keep the property open.
“We hope to emerge with a healthy balance sheet, a solid platform from which the Trump Taj Mahal can emerge as the leading gaming destination in Atlantic City,” Trump Entertainment attorney Erez Gilad told the judge.
Icahn also has struck deal with the official creditors committee in the proceeding. Icahn agreed to make $3.5 million available to general unsecured creditors.
Icahn also has committed to provide up to $82.5 million to help the company exit bankruptcy. Creditors voting for the plan must also agree to liability releases protecting the Trump Entertainment and Icahn entities from future litigation.
Gross approved a plan for Icahn to exchange his debt for all of the reorganized company’s stock.
The approval comes despite the fact that Icahn has received little of what he has said would be a pre-requisite for him making the deal.
Icahn has said he wants significant tax breaks from the city and state. However, a plan to consolidate the city’s casino taxes into a cumulative payment in lieu of taxes is languishing in the state legislature and has not been approved.
Trump officials say they can save the money they need through specific tax appeals.
Icahn has also said he wants labor peace after Gross previously ruled Trump Entertainment could scrap its labor contract with city casino workers unions. Local 54 of UNITE-HERE, the biggest city casino workers union, has appealed that decision.
Icahn has urged the union to drop the appeal, but the union has not budged.
At issue is union health benefits and pension payments. Icahn wants to provide workers with a stipend to seek health insurance under the federal Affordable Care Act and cut pension payments, something the union bitterly opposes.
If the appeal is successful, Icahn could exercise an option to walk away from the deal.
“We do believe we will have ample liquidity to operate while we wait for a decision on the appeal,” William Hardie, a financial adviser working with Trump Entertainment told the Associated Press.
Still, Local 54 organized a rally in front of the casino shortly after the judge’s ruling was announced saying they intend to keep fighting the reorganization plan. The union has charged that Icahn is systematically stripping employees of their benefits, changing hours and procedures arbitrarily and making the Taj Mahal one of the worst casino employers in the city.
Icahn responded with another letter—he has sent three previously—sent directly to union employees accusing the “abhorrent” union leadership of operating a union healthcare plan that is akin to a protection racket extorting money from casinos.
“Over the last five years, while the Taj Mahal has gone bankrupt not just once, but twice, your UNITE-HERE health plan has made $140 million in net income,” Icahn wrote. “Yet even against the backdrop of your employer entering bankruptcy for the second time in five years, your union leadership continues to demand that the Taj make exorbitant contributions to the profitable UNITE-HERE health plan, or else suffer labor unrest.
“It all reminds me of that bygone era when organized crime would demand grocers pay for protection, or suffer bricks being thrown through their store windows,” Icahn wrote. “The only real difference here is that instead of throwing bricks through the Taj Mahal’s windows, your union instead organizes strikes, picketing, boycotts and other attacks to deter customers from patronizing the Taj Mahal.”
