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02-17-2009, 09:10 AM
Trump Entertainment files for Chapter 11
By Matthew Garrahan in Los Angeles
Published: February 17 2009 09:25 | Last updated: February 17 2009 09:25
He is known as a successful entrepreneur to the millions who watch him on the US version of The Apprentice but Donald Trump on Tuesday suffered the indignity of watching a company that bears his name file for bankruptcy protection.
Trump Entertainment Resorts, of which Mr Trump owns 28 per cent, filed for Chapter 11 protection at a court in New Jersey on Tuesday after bondholders who control the debt-laden casino operator rejected Mr Trump’s attempt to take the company private.
Mr Trump had resigned from the board at the end of last week.
The filing came as the group missed its last deadline on a $53m interest payment. It is not the first time the group has filed for Chapter 11: four years ago, an earlier incarnation of Trump Entertainment also sought bankruptcy protection from its creditors.
The filing reveals that the company has assets of $2bn and total debts of $1.7bn. Its biggest creditor is US Bank, which is acting as agent for the bondholders in the group. The group of bondholders could not be reached for comment but they are owed $1.3bn, according to the filing.
Other creditors include Bally Gaming, a Las Vegas-based group, and Bovis Lend Lease, the property developer, which is owed $7.5m.
Like other casino operators, Trump Entertainment, which owns three resort properties in Atlantic City, has been hit by the economic downturn and a severe slump in visitor attendance and gaming revenues.
In a stinging statement released last week following his resignation from the board, Mr Trump laid the blame for the group’s demise squarely on the bondholders. He accused their representatives of making “a series of bad decisions” and said they had “encouraged wasteful spending, which has led to severe problems with the company”.
Mr Trump pointed to the contrast between Trump Entertainment and The Trump Organisation, which he controls. “While The Trump Organisation grows and flourishes, Trump Entertainment …has languished. The Trump Organisation’s portfolio of residential, commercial, hotel, and golf properties has expanded all over the world, while Trump Entertainment has yet to diversify outside of Atlantic City.”
Mr Trump could not be reached for comment but his statement of last week suggests he opposed the bankruptcy route. “Now I will study and watch as the horrible and outrageous fees being paid to lawyers and consultants will suck the blood from the company,” he said.
“This internal turmoil will be compounded by dramatically deteriorating revenues across the board for casino companies in Atlantic City as the market tanks and competition from local markets grows.”
The entrepreneur has embarked on a costly golf resort and housing development project on the east coast of Scotland. In an interview with the FT last month, Mr Trump said development of the Scottish project would begin soon, although he intends to wait for market conditions to improve before starting work on the residential component.
By Matthew Garrahan in Los Angeles
Published: February 17 2009 09:25 | Last updated: February 17 2009 09:25
He is known as a successful entrepreneur to the millions who watch him on the US version of The Apprentice but Donald Trump on Tuesday suffered the indignity of watching a company that bears his name file for bankruptcy protection.
Trump Entertainment Resorts, of which Mr Trump owns 28 per cent, filed for Chapter 11 protection at a court in New Jersey on Tuesday after bondholders who control the debt-laden casino operator rejected Mr Trump’s attempt to take the company private.
Mr Trump had resigned from the board at the end of last week.
The filing came as the group missed its last deadline on a $53m interest payment. It is not the first time the group has filed for Chapter 11: four years ago, an earlier incarnation of Trump Entertainment also sought bankruptcy protection from its creditors.
The filing reveals that the company has assets of $2bn and total debts of $1.7bn. Its biggest creditor is US Bank, which is acting as agent for the bondholders in the group. The group of bondholders could not be reached for comment but they are owed $1.3bn, according to the filing.
Other creditors include Bally Gaming, a Las Vegas-based group, and Bovis Lend Lease, the property developer, which is owed $7.5m.
Like other casino operators, Trump Entertainment, which owns three resort properties in Atlantic City, has been hit by the economic downturn and a severe slump in visitor attendance and gaming revenues.
In a stinging statement released last week following his resignation from the board, Mr Trump laid the blame for the group’s demise squarely on the bondholders. He accused their representatives of making “a series of bad decisions” and said they had “encouraged wasteful spending, which has led to severe problems with the company”.
Mr Trump pointed to the contrast between Trump Entertainment and The Trump Organisation, which he controls. “While The Trump Organisation grows and flourishes, Trump Entertainment …has languished. The Trump Organisation’s portfolio of residential, commercial, hotel, and golf properties has expanded all over the world, while Trump Entertainment has yet to diversify outside of Atlantic City.”
Mr Trump could not be reached for comment but his statement of last week suggests he opposed the bankruptcy route. “Now I will study and watch as the horrible and outrageous fees being paid to lawyers and consultants will suck the blood from the company,” he said.
“This internal turmoil will be compounded by dramatically deteriorating revenues across the board for casino companies in Atlantic City as the market tanks and competition from local markets grows.”
The entrepreneur has embarked on a costly golf resort and housing development project on the east coast of Scotland. In an interview with the FT last month, Mr Trump said development of the Scottish project would begin soon, although he intends to wait for market conditions to improve before starting work on the residential component.