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April 1, 2009 12:45 PM

Sonnenschein, WolfBlock on Icahn Casino Bid

Posted by Brian Baxter

Tropicana Entertainment was down on its luck in 2008.

After New Jersey authorities revoked the license of its Tropicana Casino and Resort in Atlantic City in late 2007, the Crestview Hills, Ky.-based casino and riverboat gambling operator was forced to file for bankruptcy the following May.

Now corporate raider Carl Icahn is part of a Tropicana lender group trying their luck with a low-ball $200 million bid for the Atlantic City casino, which is currently under the control of a court-appointed conservator while its owner attempts to reorganize in Chapter 11 proceedings in Delaware.

Icahn actually sold the bulk of his casino holdings, which included Las Vegas's Statosphere Casino and Hotel, for $1.3 billion in April 2007. By the time that deal closed the next year, the gaming industry was already seeing the effects of the economic downturn.

Tropicana Entertainment's bankruptcy docket shows Sonnenschein Nath & Rosenthal corporate reorganization partners Peter Wolfson and Holly Falkowitz making appearances for Icahn Associates Corp., a privately owned entity controlled by Icahn. (Neither lawyer immediately responded to requests for comment.)

A bio of Wolfson on Sonnenschein's Web site shows that he's previously advised Icahn on the Chapter 11 case of WestPoint Stevens, a textile maker that Icahn won a bidding war for in 2005.

Icahn is part of a group of secured lenders that holds a $1.4 billion mortgage on the Tropicana. The lender group itself is being represented by Gilbert Brooks, a Cherry Hill, N.J.-based gaming law partner with WolfBlock, which voted to dissolve last week.

Icahn Associates deputy general counsel Keith Schaitkin confirmed that Sonnenschein is serving as outside counsel for Icahn's interests as part of the lender group, but wouldn't disclose how much of the Tropicana's debt is held solely by Icahn. Assistant general counsel Andrew Langham is also handling matters in-house.

The Delaware bankruptcy court is expected to hold an auction to solicit other bids for the Tropicana. If no one tops the lender group's $200 million bid, then Icahn will assume partial ownership of the Atlantic City casino.

Kirkland & Ellis restructuring partners David Seligman, Marc Kieselstein, Marc Carmel, and Erik Chalut are serving as bankruptcy counsel to Tropicana Entertainment along with litigation partners David Zott and John Amberg.

Bankruptcy court records show that the firm has billed the company for more than $23 million in fees and expenses. The bankruptcy court has so far approved fees and expenses of roughly $8.5 million with the remaining balance pending. Richards, Layton & Finger is serving as Tropicana Entertainment's Delaware counsel.

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