Trump Entertainment Resorts Inc.will file for bankruptcy again, according to knowledgeable sources. The bankruptcy could mean a fifth closing of a New Jersey casino this year (the Trump Plaze is already schedulted to close on September 16th. This is the third bankruptcy filing for Trump Entertainment and the fourth for serial bankruptor Donald Trump, who also went through a casino-property related bankruptcy in the early 1990s.
The Atlantic City firm owns two major properties in the struggling resort area — the Trump Taj Mahal and the soon to be closed Trump Plaza. The sources quoted in a Bloomberg article also say the Taj Mahal may shut in mid-November. Three other casinos have closed in Atlantic City this year, including Caesars’ Showboat and the Revel Casino Hotel just last week.
Of note, Trump does not have an active role in managing the firm today and only owns around 10% stake.
Carl Icahn stands to gain from Trump Entertainment bankruptcy
The article in Bloomberg also points out that a bankruptcy court reorganization of Trump Entertainment could end up with Carl Icahn controlling two additional hotels in the city given that Icahn hedge funds are Trump Entertainment’s largest creditor. The octogenarian billionaire also controls 68% of Las Vegas-based Tropicana Entertainment Inc., which owns the Tropicana in Atlantic City and properties in Vegas.
Possible fight over rights to company name
Legal experts say a bankruptcy filing could also result in a showdown between between Trump and Icahn in court.
Apparently getting wind of the impending bankruptcy, Trump filed a lawsuit in August requesting that his name be removed from the properties. This despite the fact he licensed his brand to the company on a royalty-free basis as part of a prior restructuring deal. The licensing agreement prohibits him from using the Trump name in association with a gambling business in several East Coast states including New York and New Jersey.
“It’s not that we’re demanding rights,” Trump explained in a recent telephone interview. “We just want the name taken off the building. We have the hottest hotel portfolio in the world right now. They are not operating the hotel in accordance with our very high standard.”
Other equity investors in Trump Entertainment include Avenue Capital Management, a hedge fund run by mark Lasry.