WILMINGTON, Del, Sept 10 (Reuters) - Trump Entertainment Resorts received U.S. Bankruptcy Court approval on Wednesday for an agreement that gives it 30 days to craft a cost-cutting turnaround plan to save its Taj Mahal casino-hotel from liquidation.
A lawyer for Trump Entertainment said after the hearing in Wilmington, Delaware, that the company could present a plan to end operations.
“It could be a liquidating plan, but we hope not,” said Kristopher Hansen, an attorney with Stroock & Stroock & Lavan who represents Trump Entertainment.
The company plans to close the smaller of its two casinos, the Trump Plaza, next week. It will become the fourth casino-hotel to close in the New Jersey seaside resort this year.
Gaming revenues in Atlantic City have fallen by about half over the past eight years as neighboring states legalized slot machines and table games.
Earlier this month the city was hit by the closures of the Showboat and the striking, two-year-old Revel casino hotel, a $2.4 billion complex that many hoped would rejuvenate Atlantic City.
Hansen said hopes that the closures would boost Trump Entertainment’s business by removing competition were misplaced and gambling revenues had fallen 25 percent since the Revel shut its doors. “We have been seeing accelerating losses,” he told Delaware Bankruptcy Judge Kevin Gross in Wilmington, Delaware.
Hansen told Gross that the company could not find financing to help keep it operating in bankruptcy, leaving the company dependent on billionaire investor Carl Icahn, who has liens on the company’s cash.
Icahn consented to giving the company 30 days to present a plan of reorganization. The plan must be confirmed by Gross in 105 days, or late November.
Icahn is owed about $286 million.
“If in fact we need to shut the Taj Mahal we will pursue an orderly wind-down of these cases thereafter,” Hansen said.
The company said it spends about $20 million a year on pension and other labor costs, which Hansen said was unsustainable in the current gambling market. He said Trump Entertainment also needed to cut its debt payments, which total $38 million annually.
The casino emerged from its last bankruptcy in 2010, with a plan backed by Marc Lasry’s Avenue Capital Management investment funds. Real estate developer-turned-reality TV star Donald Trump held a minority stake.
Icahn at the time ridiculed the Lasry-Trump plan as a “farce” that would land the company back in bankruptcy by starving it of capital.
Trump sued the company bearing his name in August to have his named removed, saying the properties were so poorly maintained they would tarnish his image.
The latest filing marks the fifth bankruptcy related to these casinos, according to Fitch, a credit rating agency.
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 Bernard Orr)