Trump Beats Icahn in Court Battle

Image: Amy Sussman/Getty Images for Tetra Pak

In a battle of giants, Donald Trump has regained control of his bankrupt New Jersey casino operations, beating a reorganization plan submitted by billionaire investor Carl Icahn.

Trump clearly had the best plan, according to two industry experts.

“Trump put forward a plan with cash infusion, as opposed to Icahn’s mortgage plan, which would have wiped out the bondholders,” said Edward Mermelstein, a partner in the New York commercial real estate law firm Rheem Bell & Mermelstein LLP. “So it was simple: Cash speaks.”

A billionaire New York real estate player who has both worked with Donald Trump and is a neighbor of Icahn's in the Hamptons, said that Trump brought more than just cash to the table. While both Trump and Icahn are brilliant financial players, Trump possesses the particular skills that are needed in entertainment and gaming. He has strengths in marketing, promotion, and generating media excitement, said Elie Hirschfeld, president of Hirschfeld Properties LLC in New York.

Moreover, Trumps children will be able to continue to bring youthful vigor to the Atlantic City operations, Hirschfeld said.

Trump Entertainment Resorts Inc. said Monday that U.S. Bankruptcy Court Judge Judith Wizmur in New Jersey accepted Trump's reorganization plan, which allows him to retain control of three casinos in Atlantic City. Wizmur rejected a competing plan filed by Icahn, whose hedge fund holds $480 million of Trump Entertainment's bank debt.

Under Trump Entertainment's reorganization plan, $225 million of new equity will be injected into the company, which will also be able to retain the Trump brand for its Atlantic City operations. The plan is supported by a bondholder group which is owed $1.2 billion. The group is led by New York private-equity firm Avenue Capital, now the largest shareholder in Trump Entertainment.

Now it is up to Trump to make his plan work. If the plan doesn't work, then Icahn will look like the winner for remaining silent when Trump put his cash on the table.