Donald Trump objects to noteholders' 'illusory' reorganization plan

By Caroline Salls

Pittsburgh, Sept. 29 - Donald J. Trump objected to the plan of reorganization proposed by an informal group of Trump Entertainment Resorts, Inc.'s 8½% noteholders, calling the plan "an illusory free option unworthy of judicial review," according to a Tuesday filing with the U.S. Bankruptcy Court for the District of New Jersey.

Trump said the plan filed by the company was "proposed by a public company acting through independent directors in a fiduciary capacity" and is supported by a nationally chartered bank, which is the only in-the-money stakeholder.

However, Trump said the noteholders' plan "is signed only by a conflicted law firm on behalf of an unidentified ad hoc committee, which fails to satisfy even the minimal disclosure requirements under Bankruptcy Rule 2019 for appearance in a bankruptcy case, let alone the stringent disclosure obligations imposed upon a plan proponent."

As a result, Trump said the informal investor group "can delay no longer its obligation to come clean about who it is, what it represents and what it intends."

Specifically, Trump said the investor group must disclose the identity, holdings, level of participation, trading history, financial wherewithal and gaming track record of each of its members in enough detail to give the company's unsecured creditors adequate information to make an informed decision on whether to accept or reject the plan and whether to co-invest in the noteholders' proposed rights offering.

"Pursuit of the illusory plan would be comical if it were not potentially so tragic," Trump said in the objection.

"Not only does the ad hoc investor group seek to pursue an entirely optional and completely unfeasible transaction, but it seeks to appropriate the funds of general unsecured creditors through an illegal rights offering.

"If that was not enough, the ad hoc investor group also fails to inform potential investors that their new equity will stand behind a large amount of debt, the terms of which are unknown."

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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