WILMINGTON, Del. – A federal bankruptcy court judge ruled Trump Entertainment could stop paying for healthcare and pensions of UNITE HERE Local 54 workers at Trump Taj Mahal, saving the casino for now, but potentially stripping these benefits from thousands of resort casino employees.
Trump Entertainment officials have said they needed to cut $14.6 million in costs including $5 million healthcare expenses.
They expressed optimism that the casino could remain open, and said it would now approach state officials for what they said in court Tuesday was a $175 million package they needed to remain viable.
However, state Senate President Stephen Sweeney, who sets the upper chamber’s agenda, quickly ruled out any state assistance.
“Stripping the employees of health care and their existing pensions is a destructive act of profiteering that should not be allowed,” Sweeney said in a statement released after the ruling. “I won’t allow state or any other public funds or subsidies to be used to support this plan.”
After state and local officials rejected other proposals, Trump Entertainment now seeks a five-year, $30 million per-year payment in lieu of taxation arrangement as well as $25 million in state grants. State lawmakers would have to sign off on the Urban Revitalization and Economic Redevelopment grants.
Jon Hanson, an advisor of Gov. Chris Christie who chairs the New Jersey Gaming, Sports and Entertainment Advisory Commission, told The Press of Atlantic City on Thursday he had talked with a Trump attorney, but the commission was in “listening mode.”
The Trump proposal, Hanson said, is “not our number one mission.”
The judge's decision brought a swift reaction from Bob McDevitt, president of the union, which plans an Oct. 24 picket.
This is just a page out of Carl Icahn's book," McDevitt said. "We're going to take this billionaire on."
"I think it's a disgrace," he added. "The entire city is under siege."
Bankruptcy Court Judge Kevin Gross ruled on in Delaware Friday afternoon that the casino company met the necessary requirements for the relief. He planned to issue a full opinion on Monday.
Trump Entertainment and Local 54 attorneys said they understood that this meant healthcare coverage for the union employees ends Oct. 31.
Local 54 attorney Kathy Krieger said the union would appeal, and sought to stay Gross’s ruling. She argued the ruling would harm the workers and Atlantic City’s casino industry. She also raised the specter of a possible strike effecting business.
Attorneys for Trump Entertainment and billionaire investor Carl Icahn argued the decision should immediately take effect.
Trump Entertainment attorney Kris Hansen pointed out that the firm had to tell the state Department of Gaming Enforcement next week whether or not it would close in November.
“We are not going to tell them we are closing on Monday," he said. "We are going to scrape together our cash” and remain open.
Hansen argued the casino would shut down if Gross delayed the order. “Right now we can keep our doors open but if you stay this, we can’t," he said.
Gross said he anticipated an appeal, but “I am satisfied that balancing the hardships, that granting the stay would impose a hardship on the debtors,” i.e., Trump Entertainment.
At issue was a request by the bankrupt Trump Entertainment to drop pension coverage in exchange for a 401(k) program, and trade healthcare coverage for a $2,000 stipend for employees to enroll in Affordable Care Act exchanges, as well as a number of lesser concessions.
About 1,100 Local 54 members work at Taj Mahal.
The roughly 11,000-person union is afraid that “most favored nations” clauses in its contracts with other casinos would lead to similar conditions elsewhere. While the union’s contracts expired around the city in September, all but Trump Entertainment and the Icahn-owned Tropicana agreed to extend terms until March.
Icahn, who essentially holds the mortgage on Trump Entertainment via $286 million in debt, has said he would trade some debt for ownership and invest $100 million in the property. He also owns Tropicana.
Trump officials have warned the 1990 casino could close as soon as Nov. 13, making it the fifth to close in a year.
(Staff Writer Reuben Kramer contributed to this report.)