ATLANTIC CITY - Donald Trump won the right Wednesday to vote on a competing takeover plan by rival Carl C. Icahn in a bankruptcy duel between the two billionaires over control of three Atlantic City casinos.
The ruling by U.S. Bankruptcy Court Judge Judith H. Wizmur may help sway the power in Trump's favor ahead of a hearing next week to determine the fate of the Trump Entertainment Resorts Inc. properties.
Over the objections of Icahn's attorney, Wizmur ruled that Trump and his daughter, Ivanka, may vote on Icahn's buyout plan for the company because they are major creditors. The Trumps have filed more than $100 million in claims for the use of their name and images by the casinos.
Earlier this month, Wizmur also gave the Trumps permission to vote on a plan by Trump Entertainment bondholders to grab control of the company. Donald Trump supports the bondholders because they want to continue using the Trump name on the casinos and would give him up to a 10 percent stake in the company.
Icahn, the corporate takeover specialist who bought Tropicana Casino and Resort out of bankruptcy last year for $200 million, has teamed up with Texas banker Andy Beal in a bid for the Trump empire. Trump argues that Icahn would not be able to use the Trump name if he bought the casinos.
Wizmur has scheduled a hearing Tuesday in Camden to begin the process for picking the buyer of Trump Taj Mahal Casino Resort, Trump Plaza Hotel and Casino and Trump Marina Hotel Casino. She will choose between the Icahn-Beal plan or the Trump-bondholder proposal.
The judge will consider the votes of creditors as one factor in making her decision, although there are other elements in the case. Icahn and Beal will no doubt vote for their plan, while Trump and the bondholders will back their proposal for pulling the casinos out of Chapter 11 bankruptcy. Trump, however, will hold extra power by also having the right to vote on the Icahn-Beal plan.
"It's as simple as that. The votes should be counted and we'll take it from there," Trump attorney David Friedman told Wizmur during a teleconference Wednesday.
Bondholders, who own $1.25 billion in Trump Entertainment notes, are offering to buy the casinos for $225 million. In making a competing offer, Icahn has purchased a majority of the $486 million Beal Bank debt on the Trump casinos and plans to convert the loan into ownership of the company. He also has proposed investing an extra $125 million in the casinos.
Trump Entertainment filed for Chapter 11 protection in February 2009, the third trip through bankruptcy for the Trump casinos since the early 1990s. The company, suffocating under $1.7 billion of debt, has struggled amid the weak economy and competition from slot parlors in Pennsylvania.
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