Donald Trump faces new trouble at the roulette tables with the Atlantic City-based casino group that operates under his name yesterday filing for bankruptcy protection in a New Jersey court after missing an extended deadline on a $53m bond payment.
The filing by Trump Entertainment, which operates three large casino resorts in Atlantic City – the Taj Mahal, the Trump Plaza Hotel & Casino and the Trump Marina Hotel Casino – was|approved by the company’s board late on Monday evening. It is the third time the company, in its various incarnations, has succumbed to bankruptcy.
It is a not a move, however, that comes with the blessing of Mr Trump. Though he holds 28 per cent of the company’s stock, he resigned from the board last Friday after it became clear it would give in to pressure from bondholders to enter bankruptcy. The same bondholders had rejected an earlier offer from Mr Trump to buy the troubled company and take it private.
“Dialogue is continuing” on a restructuring of the company’s capital, its chief financial officer, John Burke, said in a statement upon the filing. “The bankruptcy will provide a forum for a prompt and efficient restructuring” of debt, he added. The company listed assets of $2.1bn (£1.5bn) and debt of $1.74bn as of 31 December last year.
The failure of the business in Atlantic City does not directly affect Mr Trump’s other businesses in property development around the US and beyond. He recently insisted that his plans to build a luxury golf course with attached housing at a site in east Scotland would shortly go ahead, even if the housing component remained on hold pending a turnaround in the property market.
“While The Trump Organisation grows and flourishes, Trump Entertainment … has languished,” Mr Trump noted in a statement issued after his board resignation. “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.”
The latest version of Trump Entertainment emerged from bankruptcy courts in 2005 and managed to turn a few quarters of profit even as it|embarked on new capital investments, including the construction of a luxury tower at the Taj Mahal. Like all its competition in the gambling industry, however, it has been buffeted by the strong headwinds of the recession.
Atlantic City was already facing competition on the East Coast as other states expanded slots gambling; the swooning US economy has hardly helped. In December, the city posted its largest decline in gambling revenue in history, with takings down 18.7 per cent. State officials calculate January revenues were down by 9.7 per cent.
In his statement, Mr Trump did nothing to disguise his frustration. “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. He added that representatives of the bondholders, which include US Bank and Bally Gaming of Las Vegas, had made a “series of bad decisions” in the running of the business and had “encouraged wasteful spending, which has led to severe problems”.