Tropicana committee of senior secured lenders objects to creditors' motion to terminate exclusivity

By Jennifer Lanning Drey

Portland, Ore., Jan. 2 - Tropicana Entertainment, LLC's steering committee of senior secured lenders objected to a motion filed by the company's official committee of unsecured creditors to terminate Tropicana's exclusive periods to file a plan of reorganization and solicit votes on the plan, in a Friday filing with the U.S. Bankruptcy Court for the District of Delaware.

The lender committee believes the creditors committee wants to terminate the company's exclusive periods because they disagree with the value of Tropicana's assets that is expected to form the basis of the plan.

The lender committee argued that disagreements over plan values are not a valid basis for terminating a debtor's exclusive periods.

"The committee is entitled to, and will have, its day in court on that issue in connection with the confirmation of the debtors' plan of reorganization," the lender committee said.

The lenders also said the creditors committee incorrectly asserted that Tropicana's pending liquidity crisis is being caused solely by adequate protection payments.

When asking the court to terminate Tropicana's exclusive periods, the creditors committee said the credit market crisis and failing economy have left Tropicana at the mercy of the OpCo and LandCo lenders, whose adequate protection payments, the committee claimed, will likely choke Tropicana's liquidity before Memorial Day.

However, the lender committee said Tropicana's declining revenues and substantial restructuring-related expenses mean that the company will run out of cash regardless of whether it continues to make the adequate protection payments.

Accordingly, all parties are under pressure to allow the company to exit bankruptcy before a liquidity crisis, they said.

The lender committee said allowing the creditors committee to submit a competing plan of reorganization would create additional litigation costs and hinder Tropicana's successful reorganization.

Tropicana's exclusive plan-filing period is set to expire on Jan. 12 and the solicitation period on March 13.

A hearing on the motion to terminate Tropicana's exclusive periods is scheduled for Jan. 8.

Tropicana, a Fort Mitchell, Ky.-based gaming entertainment provider, filed for bankruptcy on May 5. The Chapter 11 case number is 08-10856.

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