The Bankruptcy Court of Delaware approved that $20 million financing for Trump Entertainment from Icahn
The unsecured creditors of Trump Entertainment Resorts are seeking the consent of a bankruptcy court to file a lawsuit against Carl Icahn. The lenders group led by the activist investor is poised to take control of the casino company under its restructuring plan.
Trump Entertainment creditors’ argument against Icahn
The committee of unsecured creditors argued the loans provided by Icahn’s group to Trump Entertainment Resorts do not entitle them to a lien on the company’s so-called “cage cash” or reserve account. The creditors filed their argument with the United States Bankruptcy Court of Atlantic City, New Jersey.
“Today, instead of an open casino hotel, under new ownership, free of the Icahn parties’ yoke, the Plaza is closed, its workers unemployed and its trade creditors unpaid—all casualties of Icahn parties’ relentless strategy to make itself the debtors’ only option,” according to the creditors.
The creditors emphasized of that some of the claims of Icahn’s group of lenders are invalid. They want the court to conduct a hearing on their request on February 10.
Court approves $20 million financing for Trump Entertainment
Judge Kevin Gross of the United States Bankruptcy Court of Delaware approved that $20 million debtor-in-possession (DIP) financing for Trump Entertainment from Icahn to keep the struggling Taj Mahal casino open.
During the hearing, Judge Gross said, “the financing is critical, and that the loan is new money,” necessary to the restructuring.
The judge also approved the disclosure statement that explains the restructuring plan for Trump Entertainment. Gross gave his permission to the company to seek creditors’ vote on the plan.
The committee of unsecured creditors expressed concern that the plan is not feasible and the restructured company would not be sustainable.
Karen Giannelli, the lawyer representing the creditors said, “The plan is totally a money-loser and subject to the lenders’ whim to provide more financing.”
Kris Hansen, the lawyer representing Trump Entertainment said the argument of the creditors’ committee regarding the feasibility of the plan should be presented during the confirmation hearing.
“We need to keep the case moving forward … We are trying to get back to business as normal,” said Hansen.
The lawyers representing Icahn and Trump Entertainment described the hearing on Wednesday as a “watershed moment.” According to them, the new financing is enough to maintain the casino’s operations until the end of the year.