WILMINGTON, Del. – A Delaware bankruptcy judge is weighing a request by Trump Entertainment Resorts to get out of its pension obligations under a collective bargaining agreement with union workers at the Taj Mahal casino in Atlantic City, New Jersey.
After hearing arguments and testimony from company witnesses Thursday, Judge Kevin Gross said he would issue a ruling in a teleconference with attorneys Friday.
Trump Entertainment sought bankruptcy protection last month, struggling with cash-flow problems amid competition from new casinos in neighbouring states. It has threatened to close the Taj Mahal and lay off almost 3,000 workers in mid-November if it can’t win concessions from union workers.
Billionaire Carl Icahn, the company’s senior secured lender, has tentatively agreed to Trump Entertainment’s request to convert his $288 million secured debt into a 100 per cent ownership stake in a reorganized company and to inject $100 million in equity to keep the company going. But his offer is contingent on the company obtaining significant concessions from the union and steep tax breaks from local and state officials in New Jersey.
Gross had scheduled an Oct. 14 hearing on Trump Entertainment’s request for permission to terminate the collective bargaining agreement as part of an effort to reorganize and avoid closing the Taj Mahal, which could become the fifth Atlantic City casino to shut its doors this year.
But after unsuccessful attempts to persuade the union to accept concessions, including replacing the pension plan with a 401(k) plan, Trump attorneys asked the judge this week to rule separately and quickly on the pension liability. Company representatives say they are burning through the little operating cash they have and can’t afford to continue pension contributions of $300,000 a month.
But attorneys for the union and its retirement fund argued that the pension question can’t be separated from the larger issue of terminating the collective bargaining agreement, which expired two weeks ago. They also have suggested that even though the terms of the bargaining agreement remain in effect, the bankruptcy court has no jurisdiction to consider the company’s request to terminate the agreement because it already has expired.