Distressed Assets Investor

DEAL SPOTLIGHT

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has all of the tools necessary to quickly and successfully emerge from bankruptcy and rebuild a best-in-class operation,” Beal said in a statement. Trump Entertainment was unavailable for comment.

“Ultimately the purpose of Icahn’s plan is to control the Atlantic City assets,” says Edward A. Mermelstein, a real estate attorney and co-founder of law firm Edward A. Mermelstein & Associates in New York City. “Using the lender’s position is one of the simplest ways to accomplish a takeover. Generally, the investor will either buy up the first note, which takes longer, or go after a mezz position that usually shortens the time frame,” he relates. “But it is the bankruptcy court that will determine how all of this plays out. And at the end of the day, it comes down to who puts together the better financial package.”

bondholders for control of the company.

But Trump switched sides last month, saying the company’s reorganization plan was mired in expensive litigation that made a successful outcome unlikely.

Icahn has restructured troubled gaming companies before and, according to bankruptcy attorney Edward Neigher, this track record should bode well when it comes to obtaining approval for his reorganization plan.

In 2006, Ichan sold the Sands Casino
Hotel in Atlantic City to Pinnacle En-
tertainment at the height of the market.
The following year, he sold holdings in
several Las Vegas casinos to the tune of
$1.3 billion. Icahn also combined sev-
eral bankrupt casinos to form American
Casino & Entertainment, which was
sold in 2008 for more than $1 billion
and he is now working on restructur-
ing Tropicana Entertainment and the
more bankruptcy filings in the year
ahead. “We are seeing a lot of com-
panies file for bankruptcy for the sole
purpose of becoming more attractive
to a buyer; not necessarily to reorga-
nize under the same ownership,” he
notes. “There have also been record
numbers of prepackaged bankruptcies,
essentially a plan for financial reorga-
nization that a company prepares in
cooperation with its creditors that will
take effect once the company enters
bankruptcy.” The upside to this type
of plan is that it can result in shorter
turnaround times—the sooner the
company can emerge from bankruptcy,
the sooner it can implement its reor-
ganization and return to generating
revenues from its core operations.

“The TER move continues Icahn’s trend of buying
casinos very cheap, restructuring them and then
selling the assets at a premium.”
—Edward Neigher
Neigher LLP

Mermelstein’s money is on Icahn.
“Trump is known for using other
people’s money and his name,” he notes.
“That’s his expertise and he has built a
brand. But the argument today is that
there’s very little added value to having
his name associated with these assets.
And unless Trump comes in with some
hard cash, I just don’t see how he’s going
to have a continued presence at these
casino assets.”
Donald and Ivanka Trump, who
resigned from the company’s board two
days before it filed for bankruptcy back
in February, tried to buy the company
themselves and take it private. They
were offering $114 million with Beal
Bank, and were locked in a battle with
Fontainebleau Las Vegas.