U.S. Bankruptcy Judge Kevin Gross on Wednesday set a
hearing for Dec. 4 to discuss whether Trump Entertainment Resorts' Chapter 11
bankruptcy case should be converted into a Chapter 7 proceeding.
Chapter 11 bankruptcy allows a company to continue
operating and shields it from creditors while it reorganizes its finances.
Chapter 7 bankruptcy generally leads to a company’s liquidation and the
distribution of assets to creditors.
Gross said the company, which is threatening to close the
Taj on or around Dec. 12, has “no reasonable likelihood of rehabilitation” if
it doesn't get an infusion of cash soon.
Carl Icahn, the company’s main lender and owner of
Tropicana, says he will invest heavily in Trump Entertainment Resorts if the
Taj’s main union, Local 54 of UNITE-HERE, drops a court appeal over worker
benefits.
Local 54 has been locked in a bitter labor dispute over
benefits ever since Gross gave Taj the go-ahead in October to replace union
pensions with 401(k) plans and end payments to a union health fund. Under the
new arrangement, workers would find insurance through the Affordable Care Act.
Trump Entertainment Resorts says it’s all part of a
cost-cutting campaign to save the company $14.6 million annually.
The union says the campaign amounts to a huge pay cut for
already-low-paid workers and that Icahn is gutting the hard-fought union
benefits that make casino hotel jobs worth working.
On another front, Atlantic City says the Taj and its
shuttered sister, Trump Plaza, collectively owe about $22 million in real
estate taxes. The city wants to collect the allegedly unpaid taxes by selling
tax certificates at a December auction, something Trump Entertainment lobbied
against in a court filing Thursday.
In ordering a Dec. 4 hearing on liquidation, Gross said
the company, Local 54, Icahn and Atlantic City “must negotiate with the
understanding that there is urgency and an endpoint to their finding common
ground.”
Source: Press
of Atlantic City
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