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WILMINGTON, Del. (AP) — A federal judge in Delaware approved $20 million in new bankruptcy financing Wednesday for Trump Entertainment Resorts from billionaire investor Carl Icahn as the company continues to work to keep the struggling Taj Mahal casino in Atlantic City, New Jersey, open.
U.S. Bankruptcy Judge Kevin Gross approved the debtor-in-possession financing Wednesday over the objection of the company's unsecured creditors committee, which argued that it came with too many strings and would give Icahn more control over Trump Entertainment's fate than he already has.
Icahn is Trump's senior secured lender and is owed more than $285 million plus outstanding interest on its collateralized debt. The company's restructuring plan calls for Icahn to exchange his secured debt for 100 percent of the stock in the reorganized company.
Attorneys for Trump and Icahn, who described Wednesday's hearing as a "watershed moment" in the case, say the new financing is sufficient to maintain operations through the end of the year.
Trump Entertainment attorney Kris Hansen said the DIP financing and an additional $13.5 million from entities controlled by Icahn to fund Trump's exit from bankruptcy demonstrates Icahn's commitment to see the case through to the end.
"We need to keep the case moving forward ... We are trying to get back to business as normal," Hansen said.
In addition to approving the financing, Gross approved the disclosure statement explaining Trump Entertainment's reorganization plan and gave permission for the company to begin soliciting votes on the plan from creditors. Approval of the disclosure statement was a condition for the extension of the bankruptcy financing.
Attorneys for the creditors committee urged the judge to reject the disclosure statement, saying the reorganization plan as currently written is "patently unconfirmable." They argued that the reorganized company would not be financially viable without a substantial cash infusion. Icahn had previously pledged to inject $100 million into the reorganized company but later withdrew the offer as the case dragged on.
Hansen, the Trump Entertainment attorney, said the creditor committee's arguments on the feasibility of the plan should be saved for the court hearing on whether the plan should be confirmed. Trump attorneys are seeking a hearing in early March on plan confirmation.
"We need to keep the case moving forward ... We are trying to get back to business as normal," Hansen said.
While approving the disclosure statement, Gross said he shared many of the concerns raised by the creditors committee about the feasibility of Trump Entertainment's reorganization plan.
"The debtors are going to have a very difficult time with the issues that the committee has identified, but there's not going to be any lending without the disclosure statement, and that would effectively terminate the case," Gross noted.
"I continue to have feasibility concerns, those will be addressed at confirmation," the judge added.
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