Trump Entertainment Resorts took a step forward in its plan to turn control of its Atlantic City casinos to billionaire Carl Icahn as a bankruptcy court judge approved presenting the plan to creditors for a vote.
U.S. Bankruptcy Judge Kevin Gross approved the disclosure materials explaining the plan to creditors. The judge also approved a $20 million loan from Icahn to keep Atlantic City’s Trump Taj Mahal casino open during the reorganization.
“There’s no question the financing is critical, and that the loan is new money,” Gross said at the hearing.
Lawyers for Trump Entertainment said the new financing should keep the Taj Mahal open through the end of the year.
Icahn is already the company’s largest creditor holding about $286 million of the company’s debt. The reorganization plan would swap that debt for ownership of the company, the Taj Mahal and the closed Trump Plaza casino. It also calls for Icahn to invest another $100 million into the Taj Mahal.
Icahn has also sought major tax concessions from both the city and New Jersey as well as major concessions from the city’s main casino union.
Representatives of that union—Unite Here of local 54—sat on a committee of unsecured creditors that objects to the plan saying it is not feasible and the reorganized company would not be viable. The committee also said the plan gives Icahn too much control over the Taj Mahal’s fate.
“The plan is totally a money-loser and subject to the lenders’ whim to provide more financing,” said Karen A. Giannelli, a lawyer for the creditors.
Trump lawyers argued that the committee’s objections should be heard if the plan comes up for final approval by the court, but not at this point in the proceedings.
“We need to keep the case moving forward. We are trying to get back to business as normal,” Trump attorney Kris Hansen said.
Gross said he shared the creditors concerns, but overruled the objections for now, saying he will consider them again when the plan comes up for final approval.
“The company will have a very difficult time with the issues that the committee has raised,” Gross said. “But there would be no lending without the disclosure statement approval, and that would in essence terminate the case. I continue to have feasibility concerns, those will be addressed at confirmation.”
Under the plan, Icahn’s group of lenders would get control of the two casino, but unsecured creditors would receive almost nothing, according to a review of court papers by Bloomberg News.
