February 17, 2009 1:35 PM
Bankruptcy Roundup: Trump Dumps Casinos, Fortunoff Gets Sued, and Peanut Corp. Goes Under
Posted by Zach Lowe
We start our bankruptcy roundup with Donald Trump, who, for once, may not be pleased to be receiving top billing. That's because his casino company, Trump Entertainment Resorts, filed for bankruptcy protection for the third time early Tuesday--just hours before bondholders apparently planned to force the company into bankruptcy over $53 million in late interest payments, Bloomberg reports.
Like many before him in the last six months, Trump has turned to Weil, Gotshal & Manges for representation in his Chapter 11 case. Weil partner Michael Walsh is leading the firm's team. He was not immediately available for comment. Trump does have some history with Weil; the firm advised the magnate-turned-reality-TV-star in June on the $316 million sale of one of his Atlantic City casinos (Trump Marina Hotel Casino) to a real estate investment firm.
Trump Entertainment, which last filed for Chapter 11 in 2004, now lists about $2 billion in assets and $1.7 billion in liabilities, and it has been hurt badly by a decline in gambling revenue from its three Atlantic City, N.J. casinos. Court records do not yet indicate the rates Weil's top partners plan to charge, something that's been an issue lately as the best bankruptcy lawyers have crossed the $1,100/hour barrier this year.
Trump and his daughter, Ivanka, both quit the Trump Entertainment board last week over disputes with bondholders, who have grown impatient with Trump after giving the company nearly a half-dozen extensions on interest payments since Dec. 1, the Associated Press first reported. The last of those extensions expired at 9 a.m. today.
Trump Entertainment's market value has dropped from a peak of $842 million in Aug. 2005 to just $7.3 million today, according to Bloomberg.
McCarter & English is serving as Trump's local counsel in New Jersey.
Another New York–area icon struggling through the early stages of bankruptcy: Fortunoff. Having filed for Chapter 11 earlier this month, as Newsday reported Friday, the jewelry retailer laid off about 300 of its 1,800 employees last week. One of those employees has now sued the company, claiming it failed to give proper notice as required by the relevant federal and state laws (both called the Worker Adjustment and Retraining Notification Act).
Outten & Golden represents the employee in the would-be class action. The firm also represents employees of the bankrupt discount clothing company Steve & Barry's. Lee Attanasio, the lead Sidley Austin partner advising Fortunoff, did not immediately return a call seeking comment.
Interestingly, lawyers on the case say this is likely the first test of New York's new WARN Act, which went into effect on Feb. 1 and has had management-side attorneys buzzing for months in conversations with The Am Law Daily. The law requires employers with at least 50 employees to provide 90 days notice before laying off at least that number of workers--trumping the 60-day requirement under the federal act. If adequate notice isn't provided, offending employers must pay workers the equivalent of 60 days salary and benefits.
This one bears watching.
Finally, Peanut Corporation of America, the company at the center of the peanut-borne salmonella outbreak responsible for nine deaths and 636 cases of food poisoning, filed for Chapter 7 on Friday. Peanut Corp. plans to liquidate its assets and go out of business.
The company is facing more than a dozen lawsuits from food-poisoning victims and their families,and its insurance company and consumer chains that stock its products have lost money because of recalls, the Washington Post reports. Peanut Corp. has turned to the Virginia-based bankruptcy and restructuring boutique Magee, Foster, Goldstein & Sayers in the Chapter 7 case. Name partner Andrew Goldstein did not immediately return a call seeking comment.Make a comment