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Taj Mahal Casino to Continue Paying Pensions to Union Members

Oct 07, 2014 - by Monica Erdei
Trump Taj Mahal casino's managers were denied court approval to end pension payments

Trump Taj Mahal casino’s managers were denied court approval to end pension payments

The management of Trump Taj Mahal sought approval to end payments to the casino union pension fund.

US Bankruptcy Judge Kevin Gross in Wilmington, Delaware, said he didn’t have the authority to allow the gambling company to reject part of its collective bargain agreement, but added that he would consider a request to reject the agreement as a whole. The judge is expected to make a decision on a hearing scheduled for October 14.

Obtaining approval to end pension payments was a key requirement of businessman Carl Icahn, offered to spend $100 million to rescue the now-bankrupt casino. However, the deal comes with considerable strings attached, as the businessman expects tax breaks, $25 million in funds from a state agency, as well as givebacks from the workers’ union. Experts believe it is unlikely that his proposal will be accepted, considering New Jersey’s current taxation policy and gambling laws.

Unless a buyer is found, the Trump Taj Mahal Casino and Resort will become the fifth casino to close this year in Atlantic City. Trump Entertainment has threatened to shut it down at the middle of November.

Bloomberg: Trump Casinos Loss on Pension Threatens Bankruptcy Plan

According to the latest gambling news, the owner of Atlantic City’s Taj Mahal Casino was denied court approval to stop contributing to the union pension plan. The request was a key point in the company’s restructuring strategy, as Trump Entertainment is struggling to recover from bankruptcy.

Judge Kevin Gross ruled that eliminating just the pension from the collective-bargaining agreement is not an option. The measure would violate bankruptcy code, which states that a contract has to be considered as a whole.

“The court does not have authority to reject a portion of a CBA,” Gross ruled. However, Trump Entertainment’s efforts to scrap the entire union deal – which includes pensions, too – will be reconsidered at another hearing, on October 14.

The company is trying to figure out how to solve its financial difficulties and save the Taj Mahal. Court filings have revealed that the union contract costs about $15 million a year in health, welfare and other benefits, and an additional $5 million in pension payments. But if the casino doesn’t find a buyer or a way to cut costs, closing will be inevitable.

Trump Entertainment claims obtaining concessions from the union is “absolutely critical” in the restructuring process.

NY Post: Carl Icahn might save Trump Taj Mahal under right conditions

Businessman Carl Icahn is ready to save the Trump Taj Mahal from bankruptcy, but only under certain circumstances. The investor said he was willing to invest $100 million in the Atlantic City casino, provided the unions and local authorities are prepared to make some big concessions.

Trump Entertainment Resorts, the owner of the ailing casino, was forced to file for bankruptcy on September 9, but has come up with a restructuring plan that needs Icahn’s money, the union’s cooperation and the collaboration of Atlantic City authorities to succeed. If all plans fail, the closure of the casino will result in the loss of more than 4,000 jobs.

Trump Entertainment Resorts owns two casinos in the gambling Mecca, and both of them have failed. The Trump Plaza was closed recently, and the situation of the Taj Mahal is not too optimistic either. The business is projected to lose $7 million every month, even with just one casino in operation, and that figure doesn’t include debt payments to Icahn or property taxes.

In order to get out of the financial mess, the company wants to stop paying roughly $10,000 a year for each union employee, and to stop pension contributions.

GamingZion: Brookfield is Topping Bidders for the Revel in Atlantic City

It seems like Atlantic City financial problems are the highlight of American news, as casinos shut down one after the other in the former gambling kingdom. The Showboat closed at the beginning of September and the Revel is still hoping to find a way out of the mess it got itself into.

The casino opened its doors to customers just two years ago, and it has already filed for bankruptcy twice. An expensive investment that cost $2.4 billion to build, the venue has never succeeded in becoming a profitable business.

While the gambling business has failed, there might still be hope for the building that housed all those gaming tables and poker rooms. The casino’s owners said they intended to sell it to a customer who would be able to keep the building in use.

An auction held last Wednesday awarded the property to Brookfield Asset Management, after the company trumped Florida real estate developer Glenn Straub’s $90 million bid. The businessman threatened to challenge the outcome of the auction in court.

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