The Work

August 5, 2009 6:11 PM

Trump Casinos' Chapter 11 Redux

Posted by Brian Baxter

Correction / Clarification Aug. 6, 10:00 a.m.: Willkie Farr & Gallagher and Kasowitz Benson are representing Donald Trump and his daughter, Ivanka, in the proposed reacquisition of Trump Entertainment. Weil Gotshal is serving as counsel to the debtor. The names of the lawyers working on the matter from Willkie and Kasowitz are detailed below. We regret the omission and the error.

Like a gambler on a losing streak, Trump Entertainment Resorts is no stranger in bankruptcy court--the company entered Chapter 11 for a third time this past February.

Now Donald Trump and a team of lawyers led by Willkie Farr & Gallagher corporate and financial services cochair Thomas Cerabino face a fight from a bondholder group represented by Stroock & Stroock & Lavan that's opposing The Donald's rescue of his Atlantic City gaming empire. (Hourly billing rates for lawyers in this story appear parenthetically, when available.)

Trump, who resigned from TER's board shortly before the company filed for bankruptcy almost six months ago, announced on Tuesday that he would partner with an affiliate of Beal Bank Nevada to reacquire TER for $100 million out of bankruptcy court.

The casino operator owns the Trump Taj Mahal, Trump Plaza, and Trump Marina casinos, all of which Trump has vowed to make "great again" and restore to their glory days in the eighties. Helping Trump in that effort is Willkie, which is serving as lead corporate counsel. Corporate partner A. Mark Getachew and restructuring partner Rachel Strickland are assisting Cerabino on the proposed reacquisition. The firm has handled various acquisitions and restructuring assignments for Trump-related entities over the last two decades.

Kasowitz, Benson, Torres & Friedman bankruptcy chair David Friedman is serving as cocounsel to Trump. Former McKee Nelson partners William Nelson and Sheri Dillon--now with Bingham McCutchen after the firms completed a merger this week--are advising on tax matters.

Another firm with longstanding Trump connections, Weil, Gotshal & Manges, is serving as debtors' counsel to TER. Restructuring cochair Ted Waksman ($925), restructuring partner Michael Walsh ($950), and tax partner Mark Hoenig ($900) are leading a team from the firm in the Chapter 11 case.

The firm faced down a challenge by a U.S. trustee over its retention by TER in May. The trustee claimed Weil had a conflict stemming from one of TER's previous stints in Chapter 11. Weil resolved its issues with the trustee, thanks in part to an array of other law firms that have lined up to handle any conflicts that arise.

Among them is McCarter & English bankruptcy partner Charles Stanziale, Jr. ($525), who has a long history of serving as debtors' counsel to several Trump-related entities. Stanziale and fellow McCarter partners Lisa Bonsall ($495), Joseph Lubertazzi, Jr. ($495), and Jeffrey Testa ($390) are serving as TER's cobankruptcy counsel. Blank Rome and New Jersey firm Sills Cummis & Gross have also sought Chapter 11 roles for TER as special litigation, tax, and patent counsel.

Since March 1, court records show that Weil has billed Trump Casinos for more than $1.5 million in fees and expenses. The firm was paid another $1 million retainer prepetition. McCarter's current tab stands at $626,773.

All those lawyers could come in handy if Trump wants to prevail in a planned challenge to his purchase of TER by a bondholder group represented by Stroock financial restructuring cochair Kristopher Hansen and Lowenstein Sandler bankruptcy chair Kenneth Rosen, who is serving as local counsel.

The ad hoc group of senior secured noteholders objects to several elements of the proposed acquisition, which must be approved by a U.S. bankruptcy court in Camden, N.J. Hansen told Bloomberg in a statement that the "plan proposed by Beal Bank and Donald Trump is not capable of confirmation for many reasons."

The bondholder group isn't the only one to recently have a bone to pick with The Donald over his casino properties. Last week a company that once intended to buy the Trump Marina property from TER for $360 million, sued Trump in bankruptcy court claiming that the reality TV star/billionaire had failed to maintain the property.

Vincent Papalia, a bankruptcy litigator with Newark's Saiber, is representing Coastal Marina, a company formed by a one-time Trump protégé, in the suit. Weil real estate cochair J. Philip Rosen represented Trump on the initial deal in May 2008.

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