Trump Entertainment Resorts Inc. has staked the survival
of its Taj Mahal casino on
a bid for concessions from union members who so far have resisted proposed cuts
to their health and pension benefits.
The company is set to ask U.S. Bankruptcy Judge Kevin
Gross at a hearing today in Wilmington, Delaware, to allow it to
terminate its contract with Unite Here Local 54, which represents about 1,100
employees at the Atlantic City, New Jersey, casino.
Trump Entertainment has argued that the current union
contract imposes an unsustainable cost of about $20 million a year and that
cuts are necessary to induce lenders controlled by billionaire Carl Icahn to invest $100
million, according to court documents.
Management is seeking to shift workers from a traditional
pension to a 401(k) program, end the health-care plan and move employees to an
Affordable Care Act-sponsored program. The union has taken to the streets to
protest the move.
Trump Entertainment said in a court filing that Unite
Here is “willing to sacrifice the jobs of the workers at the Taj Mahal” in an
effort to “protect other members of the union working at other casinos.”
If Trump Entertainment succeeds in winning the cuts, it
could allow most other Atlantic City casinos to seek the same concessions from
Unite Here under a so-called most-favored-nation clause in their labor
agreements, according to court documents.
Tax Concessions
The benefit cuts alone won’t save the Taj Mahal, which
the company has warned may close as soon as next month. Trump Entertainment
said it also needs property tax concessions from local and state governments to
achieve its restructuring plan. Another Trump Entertainment property, the
Plaza, closed last month as Atlantic
City loses gambling business to nearby states.
The union has said that the bankruptcy judge doesn’t have
the authority to decide whether Trump Entertainment can cancel the contract,
and that federal law requires the dispute to go before the National
Labor Relations Board.
Last week, union members rallied against the proposed
cuts, protesting in front of Icahn’s Tropicana in Atlantic City. Several
hundred casino workers, some chanting “no health care, no peace,” also blocked
a highway in the city to protest the proposed concessions.
Total Contract
At an Oct. 3 hearing, Gross denied the casino owner’s
request to stop funding union pensions, ruling that bankruptcy law prohibits
rejecting only a portion of a contract. The judge said he would consider the
matter as part of today’s bid to terminate the entire collective-bargaining
agreement.
Donald
Trump, the real-estate tycoon and reality-TV star who founded the company,
began investing in Atlantic City in the early 1980s. He has no involvement in
Trump Entertainment now and has been seeking to have his name removed from both
of its properties.
The case is In re Trump Entertainment Resorts Inc.,
14-bk-12103, U.S.
Bankruptcy Court, District of Delaware (Wilmington).
Source: Bloomberg
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