Joel R. Glucksman
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201-896-7095 jglucksman@sh-law.comFirm Insights
Judge Delays Taj Mahal Bankruptcy Filing
Author: Joel R. Glucksman
Date: December 2, 2014
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A federal bankruptcy judge has just added to the uncertainty surrounding the Trump Taj Mahal, an Atlantic City casino whose owner filed for protection under Chapter 11 of the bankruptcy law.
Trump Entertainment Resorts Inc., the current owner of the Trump Taj Mahal, recently filed a revised bankruptcy plan ahead of a Nov. 5 court hearing, according to The Inquirer. This plan provides that billionaire investor Carl Icahn, who has been pursuing a debt leveraged buyout of the casino, might recover between 38 percent and 65 percent of his $292 million claim. This is based on the estimated values of the company’s two properties, the Trump Taj Mahal and the closed Trump Plaza. If the Taj Mahal remains open, Icahn could get $190 million, if it closes, only $110 million.
The accompanying disclosure statement filed with the revised plan notes that Icahn has agreed to contribute $15 million to pay for bankruptcy costs if the casino is closed, according to the news source. The company and Icahn have indicated that the casino will close – resulting in 2,800 layoffs – if state and local governments don’t provide $175 million in aid over the next five years. This includes an immediate $55 million.
Judge Gross has, however, decided to delay his decision on the revised plan, opting instead to tell the company to return in one week with a more solid plan of restructuring, according to Dow Jones Bankruptcy News.
“My concern is that there is simply too much immediate uncertainty,” Gross said during the Wednesday hearing, according to the news source. “There needs to be something in place that provides comfort that there is really a path to a plan.”
The Atlantic City casino sector has been struggling in recent years. The Inquirer noted that the low end of Icahn’s potential recovery – $110 million – is approximately equal to what Brookfield Asset Management recently paid to acquire the relatively new, but already struggling, Revel Casino Hotel. The latter hotel cost $2.4 billion to construct.
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