Trump wins plan confirmation, OK of settlement with first-lien parties

By Kali Hays

New York, March 12 – Trump Entertainment Resorts, Inc. obtained confirmation of its amended Chapter 11 plan of reorganization on March 12 from the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, the amended plan reflects an agreement in principle reached with Trump’s first-lien lenders to equitize its existing senior secured debt, eliminating $38 million of payments.

In addition, the first-lien lenders agreed to invest $13.5 million through a new term loan to repay debtor-in-possession loan obligations and specified administrative and priority claims and to finance the ongoing working capital and other general corporate purposes of the reorganized company.

This financing will allow the Taj Mahal to remain open, according to the amended disclosure statement.

The previous plan called for a $100 million equity investment, or $13.5 million of exit financing if specified conditions could not be met or waived.

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 100% of new common stock to be issued upon the plan effective date on a fully diluted basis;

• Holders of general unsecured claims will receive a share of class A or class B distribution trust interests, based on whether they exercise an opt-out election; and

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

Settlement agreement

The court also approved a settlement between Trump and several first-lien parties resolving trademark license agreement disputes, equipment and ground lease claims and some plan disputes under a separate order.

Parties to the settlement include Trump AC Casino Marks LLC, Donald J. Trump, Ivanka Trump and DJT Aerospace LLC and first-lien parties Icahn Agency Services, LLC, Icahn Partners LP, Icahn Partners Master Fund LP and IEH Investments I LLC.

The terms of the settlement include the following:

• Trump AC will dismiss a state court action seeking termination of the trademark license agreement;

• Trump Marina and Trump Plaza will no longer constitute qualifying casino properties, and all right, title and interest in the license granted in connection to those properties are null and void. All related signage will be removed;

• If the Trump Taj Mahal ceases to be continuously occupied and operated as a qualifying casino property for a period of no more than 90 days, Trump AC will have the right to terminate the trademark license agreement;

• Reorganized Trump Entertainment will pay $172.22 million to Donald J. Trump on the plan effective date in full satisfaction of his ground lease claim.

Pending assumption or rejection of the ground lease, the Trump debtors will pay all related administrative claims as they come due;

• The reorganized company will assume the ground lease on the plan effective date and cure any monetary defaults; and

• Reorganized Trump Entertainment will pay to DJT Aerospace the amount of equipment lease claims determined by the bankruptcy court to be allowed as administrative expense claims. Claims not entitled to administrative expense priority will be treated as general unsecured claims.

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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