Carl Icahn, the American billionaire investor who would take control of the Trump Entertainment’s assets once the bankruptcy plans become final, has reconsidered his position regarding the closure of Trump Taj Mahal property on Saturday Dec. 20, 2014. In a letter addressed to the CEO of Trump Entertainment Robert Griffin, Mr. Icahn conveyed his willingness to give an additional $20 million to the beleaguered casino company, as means to keep the Trump Taj Mahal casino operational during the ongoing bankruptcy proceedings.
As a backgrounder, Trump Entertainment had sought protection from creditors through the bankruptcy courts in September, as this would give the company a chance to reorganize its financial resources and settle the debts owed to creditors, including the $292.5 million plus interests owed to Mr. Icahn.
The reorganization plans include a petition for a 5-year local government aid amounting to $175 million and a cost-cutting package that included the termination of the pension coverage and health insurance contract of the casino workers. Last October 2014, the federal bankruptcy court granted approval for the latter, but the Local 54 Unite Here union representing the Trump casino workers, filed an appeal contesting the pension and health insurance coverage termination and other cost-cutting decisions.
Trump Entertainment had asked the union to withdraw its appeal, as the company will be constrained to close the hotel casino immediately on December 20, 2014. The casino company is reportedly paying the day-to-day expenses and the bankruptcy fees out of its remaining, but rapidly diminishing cash on hand while awaiting approval for its bankruptcy reorganization plans. Accordingly, the casino runs on a deficit of at least $10 million each month while keeping the hotel casino operational.
Mr. Icahn, as the creditor who stands to gain control of the Trump Taj Mahal had previously refused to sign a union contract that put forward workers’ conditions for the casino’s post-bankruptcy operations. Aside from restoring health and pension benefits, the Union contract includes conditions such as paid meal breaks, a prohibition against job outsourcing, and of limiting the number of rooms cleaned in every shift. Trump Entertainment therefore intended to make good on its threat to close the casino, since the Unite Here union preferred to contest the bankruptcy court’s decision.
However, the American billionaire, whose investment in the Canadian oil and gas firm Talisman Energy resulted to losses of as much as $540 million as of December had reconsidered, and instead wrote a commitment letter to Trump Entertainment of extending a$ 20 million financial aid. His commitment stays regardless of the Unite Here union’s refusal to withdraw its appeal and of the lack of assurance that the government will grant the $175 million financial aid.
Although many would agree that a Trump Taj Mahal closure would be a better financial decision while waiting to see if a legal agreement that can satisfy all claims could be reached, Mr. Icahn stated in his letter that he “cannot be so callous” as to allow 3,000 hardworking employees lose their livelihood. He added that Trump entertainment is one of the most distraught companies he has ever come across in his more than 50 years of making investments, and that there are numerous reasons that could make him simply walk away from all its troubles.
Yet as it is, Mr. Icahn commits to keep the Taj Mahal in operation throughout the entire bankruptcy proceedings.