Trump Entertainment Resorts files for bankruptcy protection
17 Feb 2009
Trump Entertainment Resorts Inc, Donald Trump's casino group, filed for bankruptcy protection on today, court documents show. Nine affiliates of the casino operator including Trump Plaza Associates, Trump Plaza Associates, Trump Marina Associates and Trump Taj Mahal Associates simultaneously sought protection, according to the filing.
The Chapter 11 bankruptcy, filed days after founder Donald Trump quit the board and four years after its predecessor company failed, listed assets of $2.1 billion and debt of $1.74 billion as of 31 December, according to the filing today in US Bankruptcy Court in Camden, New Jersey.
The Trump Entertainment board met Monday to make the final decision to file for bankruptcy, the court papers indicate. The company announced at the end of November that it would not be making a $53.1 million interest payment on bond holdings due 1 December, according to a press release. Trump Entertainment had a 30-day grace period to come up with the cash.
''Dialogue is continuing'' on restructuring the company's capital structure, CFO John Burke said in a court filing. ''The bankruptcy will provide a forum for a prompt and efficient restructuring of the'' senior notes. The company asked the court to schedule a hearing for tomorrow to consider a series of requests, including approval to pay ''critical'' pre-bankruptcy creditors such as suppliers and employees.
Bondholders ''have indicated they are preparing to file an involuntary petition'' for Chapter 11, today's court filing says. Trump Entertainment has reported profit in just three quarters since emerging from bankruptcy in May 2005.
Donald Trump quit the company's board on 4 February, saying he disagreed with bondholders' decisions, including their rejection of a buyout offer he made. Trump is a real estate developer and controlled about 28 per cent of Trump Entertainment's stock, according to a March regulatory filing. His daughter, Ivanka Trump, also quit the board on Friday.
Trump accused their representatives of making ''a series of bad decisions'' and said they had ''encouraged wasteful spending, which has led to severe problems with the company''. He pointed to the contrast between Trump Entertainment and The Trump Organization, which he controls. ''While The Trump Organization grows and flourishes, Trump Entertainment …has languished. The Trump Organization's portfolio of residential, commercial, hotel, and golf properties has expanded all over the world, while Trump Entertainment has yet to diversify outside of Atlantic City.''
Trump Entertainment's market value has tumbled to $7.3 million from its peak at $842 million in August 2005. Donald Trump, Morgan Stanley, Franklin Mutual Advisers LLC, and Sam Chang are listed as Trump Entertainment's biggest shareholders in today's petition. Shares of the company have tumbled from over $4 a share a year ago to close at 23 cents a share Friday.
The 20 largest creditors without collateral backing their claims are owed about $1.32, court papers show. US Bank National Association, as trustee for bondholders, is listed as the largest unsecured creditor with a claim of $1.31 billion. Other unsecured creditors include Bovis Lend Lease Inc., with a claim of $7.47 million; Thermal Energy Limited 1, with a claim of $1.86 million; Hess Corp., with a claim of $1.36 million; and Casino Control Fund, with a claim of $1.15 million.
Trump Entertainment emerged from bankruptcy 3.5 years ago. Its predecessor, Trump Hotels & Casino Resorts Inc., sought court protection in November 2004. It had lost money for nine years because of high interest payments that Trump claimed prevented the company from refurbishing and expanding its casinos. The three casino resorts also went through bankruptcy in the 1990s.
The US casino industry has been rocked in recent months as Americans have cut back substantially on casino visits and spending in the midst of the worst economic crisis in generations. Atlantic City posted its largest drop in gambling revenue in its history in December, plunging 18.7 per cent from a year earlier.