February 4, 2010 / 5:06 PM / 9 years ago

Corrected: U.S. judge sets stage for Trump, Icahn casino battle

(Corrects year of filing to 2009 in 8th paragraph of Dec 14 story)

WASHINGTON (Reuters) - A U.S. bankruptcy judge said on Monday that she would allow billionaire Carl Icahn and real estate titan Donald Trump to battle for control of casino operator Trump Entertainment Resorts Inc TRMPQ.PK.

U.S. Judge Judith Wizmur, said in court on Monday that she would allow a restructuring plan from the casinos’ bondholders and backed by Trump and his daughter Ivanka, to compete with another plan from Beal Bank and its new partner, Carl Icahn.

“I fully recognize the need to move forward promptly and to avoid or minimize uncertainty to give each plan a full and fair consideration,” Wizmur said. “The way to do that is to move forward as competing plans.”

Creditors would be able to vote on each of the plans and a confirmation hearing is scheduled for next year.

Last week, Icahn announced he was teaming up with Beal Bank, led by noted poker player Andrew Beal, to gain control of the company. Beal Bank filed a revised plan on Monday.

Icahn is also involved in the restructuring of the Tropicana Atlantic City Casino and Resort LLC TRPET.UL, which was approved by U.S. antitrust regulators Monday.

Icahn bought a 51 percent stake in the bank’s first lien bank debt worth about $485 million. Icahn also has rights to buy the remaining 49 percent stake.

Trump Entertainment filed for Chapter 11 bankruptcy in February 2009 as regional competition and a drop in consumer spending hurt the its three Atlantic City casinos. It is the third plunge into bankruptcy for the company.

Beal Bank’s revised plan also raised the possibility of Trump’s name being wiped off the casinos, saying the name may be more of a “disadvantage” given the company’s multiple bankruptcy filings.

The bondholders’ plan would give Trump a 10 percent stake in the company and leave his name on the casinos.

Reporting by Deepa Seetharaman; editing by Andre Grenon, Dave Zimmerman

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