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Tuesday, June 18, 2024 | Back issues
Courthouse News Service Courthouse News Service

Trump Casino Can Break Union Contract

(CN) - The Third Circuit ruled that Trump Entertainment, owner of Atlantic City's bankrupt Taj Mahal casino, can break its deal with a union on its way to exiting Chapter 11 bankruptcy.

The company, beleaguered by growing competition in nearby states that encroached on the one-time dominance of Atlantic City, N.J., was bought by billionaire Carl Icahn last year. Icahn had said that the company's ability to exit bankruptcy depended on lowering union costs.

Donald Trump, who is currently running for the Republican presidential nomination, has stated that he no longer owns any remaining stake in the company.

The ruling ends a year-and-a-half long stalemate between the casino's union, UNITE HERE Local 54, and Trump Entertainment.

After the union refused last year to renegotiate terms over health care or extend its existing collective bargaining agreement, a bankruptcy court agreed with Trump Entertainment's claim that its "dire" circumstances necessitated that the union agree to the company's proposal.

The terms included replacing union pensions with 401(k)s and replacing its previous health care and welfare programs with subsidized coverage under the Affordable Care Act.

The union appealed, arguing that the company couldn't reject the agreement after its period of expiration.

In affirming the bankruptcy court's ruling, Judge Jane Roth of the Third Circuit wrote that the mitigation of overwhelming employment costs was precisely the purpose of the provision in the bankruptcy code that allows for such modifications.

"This case exemplifies the process that Congress intended," Roth wrote.

Trump Entertainment had already taken great efforts to sell off assets to relieve its debt burden, the judge wrote, including selling off the similarly struggling Trump Plaza Hotel and Casino.

The sale brought the company's operating capital to $12 million against $286 million of debt. Contributions to pensions, health care and welfare totaled between $13.5 and 15.5 million, according to Friday's ruling.

"Instead of negotiating with the debtors, the union stalled the bargaining sessions, engaged in picketing, and attempted to harm the debtors' business," Roth wrote.

The Taj Mahal faces continued struggle at a period of reinvention for Atlantic City. In 2013, the $2 billion Revel casino went bankrupt after only a year of operation. Last year, a real estate developer purchased the bankrupt Showboat casino as part of an effort to turn the real estate into a recreational attraction not centered on gambling.

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