Trump Entertainment Resorts' bondholders filed a motion Tuesday rejecting Donald Trump's plan to revamp the bankrupt casino company and are vying to submit a rival reorganization plan that offers them greater recovery.
Bondholders hope to terminate the company's exclusive right to propose and seek approval of a reorganization plan. In the motion, lawyers argued that Trump Entertainment did not craft its own plan and failed to explore options other than the plan proposed by Trump and BNAC Inc, an affiliate of Beal Bank Nevada.
The debtors' plan benefits two people, Andy Beal and Donald Trump, and ignores the legal rights of $1.25 billion of notes and all unsecured creditors by providing them with nothing, said the bondholders' representative, Kristopher Hansen with Stroock & Stroock & Lavan, in a statement.
The motion comes one week after Trump and BNAC Inc proposed a deal to buy the company for $100 million and take it private. Trump Entertainment said its management and board of directors supported the proposal.
Bondholders are seeking permission to submit their own plan, which they said was already drafted and financed. Under this plan, they will infuse the company with $175 million in capital in the form of a rights offering bolstered by certain senior secured note holders. The plan also includes a provision to sell the Trump Marina, one of the company's three properties in Atlantic City, to Coastal Development LLC for $75 million.
Hansen added that the rival plan provides a recovery to all noteholders and all unsecured creditors and pays Beal Bank a significant amount of cash.
Lawyers have also filed a motion to appoint an examiner to investigate a number of issues concerning the conduct of the debtors before and during their bankruptcy, Hansen said in the statement.
Trump Entertainment was not available for comment.
Trump Entertainment filed for bankruptcy protection in February as the recession and declining gambling revenues battered the casino industry. The Chapter 11 filing marked the third plunge into bankruptcy for the company.
The case is In re: Trump Entertainment Resorts Inc., U.S. Bankruptcy Court, District of New Jersey, No. 09-13655.
(Reporting by Deepa Seetharaman; Editing by Phil Berlowitz)