Trump Entertainment gets interim operating cash
A Delaware bankruptcy judge on Wednesday agreed to allow Trump Entertainment Resorts to temporarily continue operations using cash owed to billionaire Carl Icahn, the company's sole secured lender.
Judge Kevin Gross also signed routine orders allowing the company, which owns two Atlantic City casinos, to continue paying vendors and employees as it works on a debt restructuring that could avert the closing of the Taj Mahal Casino Resort.
The company, whose Trump Plaza resort is closing in a week, sought bankruptcy protection on Tuesday. It is working with various entities controlled by Icahn to shore up its liquidity and trying to win concessions from union workers, and has threatened to close the Taj Mahal on November 13 if it can't stabilise its financial situation.
"The runway here is very short," Trump attorney Kristopher Hansen told Gross, saying that the company shuttering the Taj Mahal is a "significant possibility" if negotiations with the Icahn entities and the union don't bear fruit.
"It's just an unfortunate reality," said Hansen, who said the Trump companies have been on the leading edge of a downward spiral for Atlantic City's gambling industry, which has been hit hard by competition from casinos in neighbouring states.
The company on Tuesday delivered notices to Taj Mahal employees warning of potential layoffs. Trump has about 2,800 full-time workers, with 446 at the Plaza and 1,140 at the Taj Mahal covered under a collective bargaining agreement with its largest labour union.
A shutdown would make the Taj Mahal the fifth Atlantic City casino to close this year.
Icahn became the Trump company's senior secured lender following a previous bankruptcy filing in 2009 and is currently owed more than US$285 million plus outstanding interest on its collateralised debt.
"That cash collateral represents the sole source of liquidity that is available to the debtor," Trump attorney Erez Gilad told the judge.
In return for allowing the use of cash collateral backing its secured debt over the next nine weeks, the Icahn group has put the Trump company, which has annual debt service obligation of US$38 million, on a short leash.
The bankruptcy schedule imposed by the Icahn group includes the filing of a plan within 30 days, approval of the disclosure statement outlining the plan for creditors within 75 days, and court confirmation of a bankruptcy plan acceptable to the Icahn group within 105 days.
"Though they are tight, we think they are achievable," Hansen said of the milestones.
The next hearing in the case is scheduled for October 6.