ATLANTIC CITY, N.J. (AP) — The prospects for Atlantic City's crumbling casino market are worsening.
All sides scrambled to regroup from the collapse Wednesday night of a deal to sell the former Revel Casino Hotel to a Canadian firm, leaving its future uncertain.
A Delaware bankruptcy judge scheduled a hearing on whether the parent company of the struggling Trump Taj Mahal Casino Resort should be liquidated. Trump Entertainment Resorts has said it will close the casino Dec. 12. The liquidation hearing is set for Dec. 4.
And looming early next year is a widely expected bankruptcy filing by a division of Caesars Entertainment, the company that owns three of Atlantic City's eight remaining casinos.
Judge Kevin Gross issued an order late Wednesday scheduling the hearing on whether it's time to pull the plug on Trump Entertainment, which is about to close its last remaining casino.
"The debtors are facing continuing loss to and diminution of their estates, and although repeatedly promised, are continuing to operate without debtor-in-possession financing, without which there is no reasonable likelihood of rehabilitation," he wrote.
Gross also said that the main parties to the case — Trump Entertainment, billionaire Carl Icahn as its main lender, Local 54 of the Unite-HERE casino workers' union — must work with Atlantic City to "negotiate with the understanding that there is urgency and an endpoint to their finding common ground."
The company wants to turn itself over to Icahn, who would pump $100 million into it. But the deal depends on $175 million of state or local tax aid that so far has been rejected.
The company is also demanding that Local 54 drop its appeal of Gross's Oct. 17 order canceling its union contract, freeing the company from making costly health insurance and pension payments. Trump Entertainment estimates that ruling would save it $14.6 million a year.
On Thursday, Icahn and Trump Entertainment filed court papers objecting to Atlantic City's effort to collect $22 million in unpaid taxes, arguing that the amount due is the subject of an unresolved appeal. Letting the city sell tax sale certificates next month would subject the company to an interest rate of up to 18 percent, plus a 6 percent penalty in paying off the taxes to avoid foreclosure.
About 3,000 jobs would be lost in a shutdown. Already this year, 8,000 workers lost their jobs when four other casinos closed.
The decision by Brookfield Asset Management to scrap its planned $110 million purchase of Revel could open the door for the losing bidder, Florida developer Glenn Straub, to renew his bid for it. Brookfield pulled out of the deal because bond holders refused to rework debt stemming from the construction of Revel's power plant.
Straub's attorney, Stuart Moskovitz, said he has three options. The first is to pursue the appeal and try to invalidate the court-approved sale for $110 million, meaning Straub would get the property for $90 million. The second is to drop that appeal and seek to be awarded the property for the $95 million Straub had bid before Brookfield made its final offer. The third is to walk away from the sale.
It was unclear Thursday which option Straub favored.
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Wayne Parry can be reached at http://twitter.com/WayneParryAC
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