ATLANTIC CITY — The government watchdog in the bankruptcy reorganization of Trump Entertainment Resorts Inc. is objecting to plans for the casino company to pay nearly $20 million in legal and professional fees incurred by its new owners.
In a court filing Wednesday, U.S. Trustee Roberta A. DeAngelis argued such a payment would violate federal law because the beneficiaries would be the new owners, not Trump Entertainment.
DeAngelis wrote that the corporate bondholders who bought Trump Entertainment out of bankruptcy this summer are simply motivated by their “own self-interest and not the best interest” of the company.
“The ad hoc committee’s motives were clearly designed to benefit itself by obtaining control over the debtors,” DeAngelis said, referring to the group of bondholders that acquired Trump.
Bondholders are seeking U.S. Bankruptcy Court approval for Trump Entertainment to pay $19.5 million of their legal and professional fees stemming from the Chapter 11 takeover battle for the gaming company. In addition, the bondholders want Trump Entertainment to reimburse them for $2.2 million in fees paid to their financial adviser.
DeAngelis also objects to having Trump Entertainment pay for the financial adviser, claiming there are no documents supporting the “reasonableness” of those fees. She said Trump should not be burdened by such expenses.
Kristopher M. Hansen, lead bankruptcy attorney for the bondholders, could not be reached for comment Thursday. DeAngelis’ office also was unavailable for comment.
The U.S. Trustee, a member of the federal Justice Department, oversees bankruptcy cases and serves as a watchdog to ensure compliance with the bankruptcy code.
DeAngelis’ motion comes as Trump’s bankruptcy restructuring is winding down and final bills are coming before the court for approval. A bankruptcy judge is scheduled to hear the motion Tuesday.
Bondholders completed their $225 million purchase of the three Trump casinos in July, beating out a competing offer by billionaire investor Carl C. Icahn. Trump Entertainment had agreed in advance to pay the bondholders’ fees if they were successful in buying the company.
Trump, the bondholders and Icahn recently reached a settlement to end all litigation in the bankruptcy battle. Icahn, who holds the $486 million mortgage on the Trump casinos, had appealed the judge’s ruling that gave bondholders control of the company, but will now drop the challenge.
DeAngelis’ motion says if the bondholders are successful in having Trump Entertainment pay their fees, the company will also be on the hook for the legal and professional expenses incurred by Icahn and his financial partner during the litigation.
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