WILMINGTON, Del., Oct 14 (Reuters) - A bankruptcy judge said he will rule Friday whether to allow the owner of the Trump Taj Mahal casino in Atlantic City, New Jersey to shed its labor pact in order to clinch a $100 million rescue deal with billionaire Carl Icahn.
Parent company Trump Entertainment Resorts Inc has said trimming $14.6 million from its annual union pension and healthcare costs is key to save the casino from becoming the fifth to close this year in the seaside resort.
“I will shoot for Friday,” said Kevin Gross, the U.S. Bankruptcy judge overseeing the case, at the end of an all-day hearing on Tuesday. He said he would read his ruling during a teleconference at 3 p.m. EDT (1900 GMT) on Friday.
Atlantic City has lost thousands of jobs this year and Trump Entertainment has warned it could be forced to begin winding down the Taj Mahal operations as soon as next week.
Trump Entertainment said Icahn is prepared to take over the casino and keep it open, although his plan depends on Atlantic City and New Jersey providing tax incentives that authorities have so far rejected.
Kristopher Hansen, a Trump attorney with Stroock & Stroock & Lavan, told Gross ending the union contract was critical. “We need it to save 3,000 jobs. We need it to keep Atlantic City alive.”
Gross pushed back on Trump Entertainment’s dire warnings, noting that Icahn stands to lose potential tax credits worth more than $1 billion if the company liquidated.
The union argued that labor was being asked to suffer permanent concessions before the state, Atlantic City and Icahn committed to the rescue. Kathy Krieger, a lawyer with James & Hoffman who represented the union, said Gross could shed the collective bargaining agreement on an interim basis, and if others joined, then his order could be made permanent.
The Trump Entertainment labor proposal has sparked protests by Unite Here Local 54 union, which represents workers at the eight remaining casinos in the city. Hundreds of workers blocked traffic in the city and more than 20 people were arrested last week.
Workers have directed their anger at Icahn, who is Trump Entertainment’s lender and who controls the company’s cash. He is owed $292 million, a portion of which he plans to convert into ownership of the casino.
Icahn affiliates also control another Atlantic City casino operator, Tropicana Entertainment Inc.
Icahn’s lawyer, Allan Brilliant of Dechert, told the court he called the billionaire during the hearing and was told that Icahn would stick with the rescue deal, even if the workers went on strike.
Trump has offered to move employees to defined contribution 401k savings plans and increase pay by $2,000 annually to defray the cost of obtaining insurance through the healthcare marketplace established under the Affordable Care Act.
The case is In Re: Trump Entertainment Resorts Inc, U.S. Bankruptcy Court, District of Delaware, No. 14-12103. (Reporting by Tom Hals in Wilmington, Delaware; Editing by Tom Brown)