July 19, 2010 6:39 PM

The Bankruptcy Files: Trump Casinos Exit Chapter 11

Posted by Brian Baxter

For the third time in its history, Trump Entertainment Resorts has emerged from bankruptcy by eliminating $1.3 billion in debt, according to an announcement by the company late Friday.

Weil, Gotshal & Manges served as lead bankruptcy counsel to Atlantic City, N.J.-based TER, which operates three casinos in the coastal New Jersey city under the Trump banner. TER filed for bankruptcy in February 2009, after former chairman Donald Trump and his daughter Ivanka quit the company over disputes with bondholders.

Over the next several months, several billionaires, including Trump, jockeyed for control of TER. As noted by Reuters, TER's largest bondholder was Marc Lasry of Avenue Capital Group, while Texas banker Andy Beal held the company's secured debt. When Trump threw his support behind Lasry, Beal brought in Carl Icahn to back his own bid for the casino operator.

All the machinations pulled in enough lawyers to fill up one of Trump's famous casinos. Bondholders turned to Stroock & Stroock & Lavan and Lowenstein Sandler for counsel, Icahn hired Brown Rudnick, and Beal relied on lawyers from White & Case.

As we've previously reported, Trump himself was represented by Kasowitz, Benson, Torres & Friedman bankruptcy chair David Friedman and Willkie Farr & Gallagher corporate partner A. Mark Getachew and restructuring partner Rachel Strickland. After a deal was reached with the bondholders last November, Trump was then left to battle with Icahn, who has picked up several distressed casino assets in recent months.

A bankruptcy court judge in Camden, N.J., ruled against Icahn in his bid to take control of TER in April, paving the way for Trump and Lasry to take control of the company and bring it out of bankruptcy.

Weil real estate chair J. Philip Rosen, corporate partners Warren Buhle and Marsha Simms, restructuring partners Michael Walsh and Ted Waksman, IP partner Charan Sandhu, tax partner Stanley Ramsay, and litigation partners Peter Isakoff and Angela Zambrano advised TER on the change of ownership following its exit from Chapter 11.

Rosen, no stranger to closing deals for Trump-related entities, praised the deal allowing TER to exit Chapter 11. "Management is staying in place and the Trump name, which is extremely valuable, is staying with the properties," he says. "So I think the end result is a good one and the right one for the company."

According to bankruptcy court filings, Weil has billed TER for nearly $7.4 million in fees and expenses in the case through January 31 of this year. McCarter & English bankruptcy partner Charles Stanziale, Jr., and partners Lisa Bonsall, Joseph Lubertazzi, Jr., and Jeffrey Testa served as co-bankruptcy counsel to TER. The firm billed for more than $2.2 million in fees and expenses from the start of the case through May 7.

Some other recent bankruptcy filings of note (hourly billing rates for partners in parentheses, when available):

Jennifer Convertibles

It's time to break the bad news to your overnight guests: furniture store operator Jennifer Convertibles filed for bankruptcy in Manhattan on July 18 after reaching an agreement with its largest creditor and foreign supplier--China's Haining Mengu--to convert debt into equity in the company, according to a report from Dow Jones Newswires.

Business restructuring and bankruptcy partners Michael Fox and Andrea Fischer from New York's Olshan Grundman Frome Rosenzweig & Wolosky are serving as bankruptcy counsel to Jennifer Convertibles. Mintz, Levin, Cohn, Ferris, Glovsky and Popeo is serving as special securities counsel to the debtor, which listed assets of $30 million and debts of $46.3 million.

Bankruptcy court filings show that Olshan Grundman received $351,345.53 from Jennifer Convertibles in the year prior to its Chapter 11 case and was paid a $250,000 retainer. The firm has been providing restructuring counsel to the Woodbury, N.Y.-based company since 2009. Partners are billing between $450 and $720 per hour, counsel between $450 and $800, and associates at hourly rates ranging from $280 to $440.

Mintz Levin has yet to file billing statements with the bankruptcy court.

Innkeepers USA Trust

A subsidiary of Apollo Investment Corp., real estate investment trust Innkeepers USA filed for bankruptcy in Manhattan on Monday, citing debts to creditors of more than $1 billion, Bloomberg reports. The company, which owns more than 70 hotels in 20 states and has been hit hard by the real estate downturn, will see real estate entities of Lehman Brothers assume most of its equity as part of a prepackaged restructuring plan.

Kirkland & Ellis restructuring partners James Sprayregen ($995), Paul Basta ($955), Anup Sathy ($895), and Marc Carmel ($735) and litigation partner Daniel Donovan are advising Palm Beach, Fla.-based Innkeepers USA on its Chapter 11 case. Bankruptcy court filings show that the firm was retained in March with a $1 million retainer that was supplemented on July 14 with an additional $95,588.

Kirkland partners are billing between $550 and $995 an hour, of counsel between $500 and $965, and associates between $320 and $660. Marc Beilinson, a turnaround professional and former partner at bankruptcy boutique Pachulski Stang Ziehl & Jones, is serving as chief restructuring officer for the debtor.

Riviera Holdings

Those that have had the pleasure of cruising the Las Vegas Strip know the Riviera Hotel & Casino as a local landmark that's served as a filming location for Sin City classics like Casino, Ocean's Eleven, and The Hangover. But now the Riv has hit hard times--Bloomberg reports its holding company filed for Chapter 11 on July 12 after reaching a restructuring agreement with lenders holding secured claims under a $228 million credit agreement.

The Las Vegas Sun reports that Riviera's prepackaged restructuring plan has gained the approval of 75 percent of the company's debt holders. Riviera, which reportedly received a takeover offer in March from Starwood Capital, will continue operating out of Chapter 11. Gerald Gordon, a name partner at Las Vegas firm Gordon Silver, is advising Riviera in its Chapter 11 case along with bankruptcy partner Thomas Fell.

Riviera lenders are represented by Wachtell, Lipton, Rosen & Katz and Fox Rothschild's Brett Axelrod.

Controladora Comercial Mexicana

CCM, Mexico's third-largest supermarket chain, filed for Chapter 15 bankruptcy protection in Manhattan on Friday as part of a $1.54 billion prepackaged debt restructuring plan. Bloomberg reports that CCM defaulted on its debt in 2008 and was sued in New York State Supreme Court by counterparties to derivative transactions the company entered into to guard against fluctuations in the Mexican peso.

Fried, Frank, Harris, Shriver & Jacobson bankruptcy and restructuring partner Gary Kaplan and associate Peter Siroka are representing Mexico City-based CCM in the case. The firm, which has not yet submitted billing documents with the bankruptcy court, represented CCM in June 2005 for a private placement of $200 million in senior notes.

Fernando del Castillo Elorza from Santamarina y Steta is serving as Mexican counsel to CCM. Michael Reilly, the cochair of Bingham McCutchen's global financial restructuring group, is advising an ad hoc group of noteholders along with corporate partner Ulises Pin and bankruptcy counsel William Govier.

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