Trump Entertainment proposes reorganization plan, disclosure statement

By Kali Hays

New York, Oct. 1 – Trump Entertainment Resorts, Inc. filed a joint Chapter 11 plan of reorganization and related disclosure statement Wednesday with the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, the company filed bankruptcy to protect its estates from the potential impact to its businesses resulting from third-party trademark and property tax assessment litigation, to restructure its outstanding debt and claims, to preserve the value of executory contracts it may elect to assume and to attempt to address its cost structure by reducing labor costs, according to a September statement from chief executive officer Robert Griffin.

According to the disclosure statement, the proposed plan reflects an agreement reached with Trump’s first-lien lenders to equitize a portion of the lenders’ existing senior secured debt and exchange the remainder of the debt for new debt requiring no cash interest payments, thereby eliminating $38 million of payments.

In addition, the first-lien lenders agreed to invest $100 million of equity capital conditioned upon Trump obtaining property tax relief from Atlantic City and/or the State of New Jersey.

Upon confirmation of the plan, holders of first-lien credit agreement claims will receive 55% of the new common stock to be issued by a reorganized Trump.

The company does not intend to register the new common stock with the Securities and Exchange Commission or any state securities regulatory authority, and it will not trade on any exchange upon the effective date of the plan, according to the disclosure statement.

Trump said that “the equity investment coupled with the tax relief and incentives will provide the necessary capital to fund operational shortfalls and capital expenditures and to provide working capital for the reorganized debtors.

“The new capital structure will substantially de-lever the company and provide additional liquidity needed to support the debtors’ future operations.”

Specific treatment of creditors under the proposed plan includes the following:

• Holders of secured claims and allowed priority non-tax claims will be paid in full in cash;

• Holders of first-lien credit agreement claims will receive a proportionate share of 55% of new common stock to be issued upon the plan effective date on a fully diluted basis and a new term loan; and

• Holders of general unsecured claims, securities law claims, subordinated claims and existing company interests will receive no distribution under the plan.

A hearing to approve the disclosure statement is set for Nov. 5.

Trump Entertainment Resorts, an Atlantic City-based owner and operator of casino resort properties, filed for bankruptcy Sept. 9. The Chapter 11 case number is 14-12103.

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