Trump Entertainment noteholders ask to cease payments to Beal Bank

By Caroline Salls

Pittsburgh, Sept. 8 - Trump Entertainment Resorts Inc.'s informal committee of 8½% senior secured noteholders asked the U.S. Bankruptcy Court for the District of New Jersey to cease all payments of interest, fees and expenses to Beal Bank as of Aug. 3 under the company's cash collateral order, according to a Tuesday court filing.

According to the motion, the company filed a proposed plan of reorganization in August that is co-sponsored by Beal Bank and Donald Trump.

Under that plan, the committee said Beal Bank and Trump would acquire the company for $100 million, "while the noteholders, who hold approximately $1.25 billion of the debtors' debt, would recover nothing."

The noteholder group said Beal Bank has received tens of millions of dollars in post-bankruptcy cash payments from the company under the cash collateral order for interest, amortization, professional fees and expenses and is scheduled to continue to receive millions more.

Based on the company's valuation under the Beal Bank and Donald Trump-sponsored plan, the committee said those payments, if continued, would violate the Bankruptcy Code, a previous U.S. Supreme Court decision and a March 17 bankruptcy court ruling regarding professional fees.

Trump Entertainment Resorts, an Atlantic City-based owner and operator of three casino resort properties, filed for bankruptcy on Feb. 17, 2009. Its Chapter 11 case number is 09-13654.

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