Trump Entertainment Resorts bankrupt; casino operations in jeopardy

By Caroline Salls

Pittsburgh, Sept. 9 – Trump Entertainment Resorts, Inc. filed Chapter 11 bankruptcy Tuesday in the U.S. Bankruptcy Court for the District of Delaware.

Chief executive officer Robert Griffin said in a statement filed with the court that the company plans to cease operations at its Plaza casino resort on Sept. 16.

In addition, absent expense reductions, particularly concessions from its unions, Trump expects its Taj Mahal casino resort to close on or shortly after Nov. 13 and all operating units to be terminated between Nov. 13 and Nov. 27.

Griffin said the Trump debtors have continued to face significant challenges since emerging from a previous bankruptcy case in 2010 as a result of the prolonged economic downturn, increased competition from within the Atlantic City market and from neighboring states and the lingering effects of Superstorm Sandy, all of which contributed to declining revenue.

The CEO said these factors, coupled with the seasonal and capital-intensive nature of the debtors’ businesses, high debt load, significant labor costs and double-digit real estate tax increases, hindered the Trump debtors’ ability to operate successfully and negatively impacted their liquidity position.

Trump filed bankruptcy to protect its estates from the potential impact to its businesses resulting from third-party trademark and property tax assessment litigation, to restructure its outstanding debt and claims, to preserve the value of executory contracts it may elect to assume and to attempt to address its cost structure by reducing labor costs, Griffin said.

Cash use request

In connection with the bankruptcy filing, the company is seeking court approval to use the cash collateral of its pre-bankruptcy secured parties to fund its operations while in bankruptcy.

The parties with an interest in the cash collateral are first-lien lenders Icahn Partners LP, Icahn Partners Master Fund LP and IEH Investments I LLC as well as first-lien administrative and collateral agent Icahn Agency Services, LLC.

The cash collateral use will expire on Dec. 31.

According to court documents, Trump has $100 million to $500 million of both assets and debt.

Debt details

Although the Trump debtors were able to significantly reduce the principal balance of first-lien debt through asset sale paydowns and amortization payments, Griffin said they remain highly leveraged, with a current principal balance of $285.6 million and annual debt service expense of roughly $38 million.

The company’s largest unsecured creditors are Thermal Energy Ltd. 1 of Atlantic City, with a $2.96 million utility claim; Levine, Staller, Sklar, Chan, Brown & Donnelley, PA of Atlantic City, with a $1.49 million litigation claim; and Fertitta Acquisitions Co. LLC of Las Vegas, with a $1.47 million trade debt claim.

The company is represented by Young, Conaway, Stargatt & Taylor.

Trump Entertainment Resorts is an Atlantic City-based owner and operator of casino resort properties. The Chapter 11 case number is 14-12103.

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