Beal Bank, Icahn Partners fight Trump plan payment recharacterization

By Caroline Salls

Pittsburgh, Jan. 15 - Beal Bank, Beal Bank Nevada and Icahn Partners have asked the U.S. Bankruptcy Court for the District of New Jersey to rule that no payments to them under Trump Entertainment Resorts Inc.'s bankruptcy case are subject to recharacterization as principal payments, according to a Friday court filing.

Beal and Icahn Partners are also asking the court to restrict introduction of evidence related to any recharacterization at Trump's upcoming plan confirmation hearing.

According to the motion, the proposed recharacterization ruling would "end the debtors' and the [informal noteholders] committee's baseless, improper, and wasteful speculation that the court-authorized post-petition interest and fee payments made in these cases to Beal Bank or Icahn Partners may be subject to recharacterization as principal payments.

Beal Bank and Icahn Partners said the plan of confirmation proposed by Trump and the noteholders depends on a forced recharacterization of post-bankruptcy payments.

"Their recharacterization argument, however, flies in the face of negotiated, unambiguous, and unchallenged provisions of" the company's cash collateral use order, the motion said.

Beal Bank and Icahn Partners said the basis for the recharacterization contention appears to be a new valuation unveiled on Dec. 24, under which they lowered the enterprise value of the Trump debtors.

Based on that lowered valuation, Trump and the committee are claiming that Beal Bank and Icahn Partners are undersecured, so some or all post-bankruptcy interest and fee payments should be recharacterized as principal payments.

However, Beal and Icahn said that argument fails to take account of the addition of post-bankruptcy revenues to collateral values under Section 552(b) of the Bankruptcy Code.

Trump Entertainment Resorts, an Atlantic City-based owner and operator of three casino resort properties, filed for bankruptcy on Feb. 17, 2009 in the U.S. Bankruptcy Court for the District of New Jersey. Its Chapter 11 case number is 09-13654.

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