Bankruptcy judge voids Trump Taj Mahal's union contract

A federal bankruptcy judge on Friday allowed the owners of Atlantic City's bankrupt Trump Taj Mahal Casino Resort to void its contract with its 1,100 union workers.

Whether the $15 million in savings will be enough to keep the doors of the troubled casino open is nowhere near a sure bet.

In a decision delivered in a Delaware courtroom, Judge Kevin Gross granted a request by the casino's owners, Trump Entertainment Resorts, to end the contract, cutting health and pension benefits.

The company, plus a potential owner, Carl Icahn, a billionaire investor who owns $286 million in Taj debt, have insisted that concessions from the union, Unite Here Local 54, and tax breaks from state and city are needed to keep the casino open.

They had threatened to shut the casino by Nov. 13, putting 3,000 union and nonunion employees out of work, and compounding Atlantic City's recent misery.

In September, 5,240 gaming jobs were lost as three of the city's casinos, battered by competition from gambling venues in surrounding states, shut.

Gross' decision on the contract clears one of the hurdles the Taj Mahal would have to clear if it is to remain open. But neither Atlantic City nor the state has agreed to any tax breaks.

"We are proud of our efforts to keep the Taj Mahal open, to deliver our loyal customers a continued first-class gaming experience, and to have the ability to save 3,000 jobs in a very difficult Atlantic City economy," Robert Griffin, chief executive of Trump Entertainment, said Friday.

"We look forward to working with our elected officials. With bipartisan leadership, we believe we can take a collective step toward a brighter future in Atlantic City," Griffin added.

Atlantic City Mayor Don Guardian and chief of staff Chris Filiciello did not return calls seeking comment Friday.

Another major obstacle: getting a study commission appointed by Gov. Christie to agree to massive state aid for the Taj Mahal and other casinos.

Taj's owners shouldn't count on much help from New Jersey State Senate president Stephen M. Sweeney, a Democrat from Gloucester County and a leader in the ironworkers union.

"This court is wrong and its decision is bad for casino workers and their families, Atlantic City and the country," Sweeney said in a statement. "Stripping the employees of health care and their existing pensions is a destructive act of profiteering that should not be allowed. I won't allow state or any other public funds or subsidies to be used to support this plan."

Bob McDevitt, who heads Unite Here Local 54, vowed to fight the Taj Mahal cuts in court and in the streets. The union plans a rally Oct. 24.

"The decision today will certainly enrage the workers who have relied on and fought for their health care for three decades," McDevitt said in a statement.

The union said that cutting health insurance and pensions and eliminating a paid lunch break would cut total compensation 35 percent for workers who earn an average hourly wage of $12.50.

The union contract also limited the hiring of outside workers, but those protections are now gone.

"Tropicana's major owner wants you to believe that the demand to take away workers' health insurance is necessary because of the financial situation at the Taj Mahal and in Atlantic City," said McDevitt, speaking of Icahn.

"We believe it has nothing to do with either. He has a long history of eliminating, reducing, or freezing worker benefits, which sometimes saddles government agencies with the burden of cleaning up the mess."

The new owners would provide $2,000 stipends for workers to find their own coverage under the Affordable Care Act.

Under a proposed bankruptcy plan, Icahn would invest $100 million in the Taj Mahal and would forgive a portion of the debt he holds in exchange for ownership and new debt, for which he would not charge interest - an annual savings of $37.4 million a year.

Icahn has rejected union criticism, saying he saved the Tropicana four years ago with the same kind of debt-for-equity deal.

Taj's owners originally sought to have Atlantic City lower its property assessments nearly 80 percent, and to have the state contribute $25 million in tax credits.

After getting a negative reaction from Guardian and Sweeney, the company revised its financial request from the state. It is now seeking $175 million in relief through a PILOT program - payments in lieu of taxes - and the receipt of two types of state economic grants not usually available to casinos: the Economic Redevelopment Grant and the Urban Revitalization Grant.

State legislators would have to vote on letting the casinos into the program.

Source: Philly.com