A federal appeals court in Philadelphia Friday upheld a decision that allowed the Trump Taj Mahal casino in Atlantic City, N.J., to escape its union contracts in bankruptcy.
The decision is a victory for Carl Icahn, the billionaire who controls the last remaining Atlantic Casino to bear the Trump name, after a series of bankruptcies.
A chapter 11 exit plan was confirmed for Trump Entertainment Resorts Inc. that puts Mr. Icahn in sole charge of the company. However, he delayed implementing the plan until the appeals court spoke on the question of the rejected union contracts.
Trump Entertainment filed for chapter 11 protection in 2014, one of several Atlantic City casino companies beaten down by a steep decline in business on the Boardwalk.
Mr. Icahn argued in bankruptcy that he couldn’t afford to keep the Taj Mahal open unless the union contracts that provided health care and other benefits to employees were rejected.
A bankruptcy judge agreed, and Friday, the U.S. Third Circuit Court of Appeals upheld the ruling, dealing a blow to UNITE Here Local 54, which had sought to upset the bankruptcy court ruling.
A spokesman for the union couldn’t immediately be reached for comment. Mr. Icahn couldn’t immediately be reached for comment.
Presidential candidate Donald Trump and his daughter, Ivanka, still hold a small slice of equity in Trump Entertainment. After filing a lawsuit to have the Trump named removed from the Atlantic City properties due to their distressed condition, the Trumps ultimately agreed to allow their name to remain on the Taj Mahal to improve its chances of a turnaround. Mr. Trump hasn’t been involved in the management of the Atlantic City gambling enterprise for some years.
Mr. Icahn gained his stake in Trump Entertainment by buying up the casino operator’s debt in an earlier bankruptcy proceeding. Once competition from nearby states began to eat away at Atlantic City’s share of the gambling market, he was able to take over the company in a new chapter 11 case.
He promised to put new funds into the Trump Taj Mahal, as long as the decision on the union contracts came out in his favor. In a recent letter to the appeals court, Mr. Icahn’s lawyers confirmed they are “willing to new invest much-needed new capital in the Taj,” which they said “performs at the bottom of the Atlantic City market.”
However, delay in getting a decision could mean the Trump Taj Mahal could drag through another summer season on the Boardwalk without the funds to get it in shape to compete. Mr. Icahn’s lawyers sought a speedy ruling on the union contract question, saying the casino couldn't afford “another lost summer.”
Friday’s ruling in the Taj Mahal case is the latest bad news for workers in the once-thriving Atlantic City gaming scene. Thousands of jobs have been wiped out in the distress that has afflicted big operators, contributing to the financial trouble that has Atlantic City itself on the ropes.
For the past year, an emergency manager has been keeping an eye on the city’s day-to-day finances, a sore point for local officials, some of whom had joined in the wave of union protests aimed at Mr. Icahn.
Union officials accused him of profiting at the expense of low-paid workers, and reaping hundreds of millions of dollars from his boardwalk gambling properties. Mr. Icahn replied in open letters that he wasn’t to blame for Atlantic City’s distress and hoped to preserve jobs and business on the boardwalk.
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