Judge to rule Friday on pensions at Atlantic City Trump casino

Reuters News
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Posted: Oct 02, 2014 5:22 PM

By Tom Hals

(Reuters) - A U.S. Bankruptcy judge said he will rule Friday on a request to end pension contributions by the owner of the Trump Taj Mahal casino, which said it will close its Atlantic City hotel if it cannot shed some obligations to unions.

Ridding the pension obligation is a key to a deal to prevent the casino from being the fifth to close this year in the beleaguered New Jersey seaside resort, which has suffered as neighboring states have embraced gambling. The closure of four casinos so far this year has cost Atlantic City thousands of jobs.

Trump Entertainment has proposed a reorganization plan that is contingent on obtaining tax concessions from New Jersey and Atlantic City as well as ending pension and health benefits for 1,200 unionized workers at the Taj Mahal.

If those concessions are made, billionaire investor Carl Icahn has said he will invest $100 million and convert half of the $292 million he is owed into stock in the company, giving him control after its bankruptcy.

"If we are unsuccessful, this business will close," William Hardie, a managing director at investment bank Houlihan Lokey, which advised Trump Entertainment, testified in court. "In my opinion we have to get rid of this burden today."

U.S. Bankruptcy Judge Kevin Gross in Wilmington, Delaware, said he will rule at noon on Friday.

Gross began Thursday's hearing by saying he thought Trump Entertainment Resorts Inc was moving too quickly to end pension contributions and pushed the two sides to negotiate.

Gross also questioned if the union, Unite Here Local 54, was willing to risk the loss of jobs at the Taj Mahal in order to avoid setting a precedent on the treatment of benefits.

"Are they being sacrificed for the benefit of other union employees at other casinos?" Gross asked at the start of the four-hour hearing.

A union pension plan attorney said Trump Entertainment is using the bankruptcy to spruce up the casino for Icahn by modifying the collective bargaining agreement and preserving up to $1 billion in tax benefits.

Trump Entertainment's attorney rejected that claim.

"It’s easy to point a finger at Icahn and say he's the big bad wolf," said Kristopher Hansen at the law firm Stroock & Stroock & Lavan. "This is not about taking care of Mr Icahn."

The case is In Re: Trump Entertainment Resorts Inc, U.S. Bankruptcy Court, District of Delaware, No. 14-12103

(Reporting by Tom Hals in Wilmington, Delaware; Editing by Leslie Adler)