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February 23, 2010 3:15 PM

Trump v. Icahn Gets Underway

Posted by Zach Lowe

Are you ready for "at least" four days of Donald Trump and Carl Icahn (and their lawyers, of course) fighting over the fate of the bankrupt casino company Trump Entertainment Resorts? The fight began Tuesday in federal bankruptcy court in New Jersey, with Trump (represented by Kasowitz, Benson, Torres & Friedman partner David Friedman, among others) and Icahn (represented by Brown Rudnick and others) each trying to convince a federal judge that their bankruptcy plan provides the best future for Trump Entertainment and its three Atlantic City, N.J., casinos, according to Reuters, Bloomberg, and court records. 

The debate between these ultra-wealthy parties has left counsel for the debtor's estate--Weil, Gotshal & Manges--marveling at the contentiousness of the case. "I don't know if it's because billionaires are involved," Weil's Michael Walsh said today, according to Reuters. 

As previously reported here, this is the third go-round in bankruptcy for Trump Entertainment, and it has been a rocky trip. Trump and his daughter, Ivanka, initially submitted a proposal under which Trump would have purchased the company out of bankruptcy for a little over $100 million and slashed its debt by about two-thirds. Bondholders, represented by Stroock & Stroock & Lavan partner Kristopher Hansen, cochair of the firm's restructuring group, and Lowenstein Sandler objected to the Trump proposal over the summer. In November, the two sides struck a compromise under which bondholders would take control of the company and retain the right to keep Trump's name on the casinos. Trump and his daughter would retain a 10 percent stake in the venture and promised not to compete against Trump Entertainment in New Jersey and five neighboring states. (Willkie Farr & Gallagher is also representing the Trumps.)

Everyone was happy. 

Except, it appears, Carl Icahn. Icahn, who recently struck deals to buy Tropicana Resort and Casino and the unfinished Fontainebleau Las Vegas Resort out of bankruptcy, purchased a controlling interest in $480 million in Trump Entertainment debt and decided to submit his own plan to take the company out of bankruptcy. Brown Rudnick is advising Icahn and the banker from which Icahn purchased the Trump Entertainment debt. (That banker, Andy Beal, also happens to be an active high-stakes poker player, according to Reuters and Bloomberg.)

Arguments are playing out in federal bankruptcy court in New Jersey as we write this, and they are expected to stretch "at least" four days, according to Bloomberg. The three casinos at stake are the Trump Taj Mahal, the Trump Marina, and the Trump Plaza, according to our prior reporting

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