Trump goes to court to try to save A.C. properties

Despite yesterday's blustery conditions, the star witness arrived at U.S. Bankruptcy Court in Camden with not a hair of his famously sculpted "do" out of place and impeccably dressed in his signature blue silk tie and dark suit.

Swagger and confidence were on full display as Donald J. Trump, with daughter Ivanka in tow (also perfectly coiffed and dressed in a blue silk blouse and black skirt), greeted lawyers and onlookers at the federal courthouse.

Then the New York real estate mogul went to work and did his best to annihilate his opponent, billionaire financier Carl Icahn, during 75 minutes of testimony before Bankruptcy Judge Judith Wizmur.

"I've known him for many years," Trump said, referring to the man who has put forth a plan to bring Trump Entertainment Resorts Inc. out of its third bankruptcy and gain control of the three Trump casinos in Atlantic City. "He's a good friend . . . but he doesn't spend money."

Trump acknowledged that the three casinos - the Trump Taj Mahal, Trump Marina, and Trump Plaza - were having trouble in this economy. But, he said, "I know the alternative, and the alternative would be a mess. Look at how he [Icahn] ran the Sands, look at TWA, Excel Communications, and many other companies that he's taken through bankruptcy."

Wizmur, who also handled the firm's bankruptcy filing in 2004-05, presided over the third day of deliberations to determine the fate of the three casinos. Because of the snow, court adjourned at noon yesterday and will reconvene Tuesday.

Before Wizmur are competing plans: one devised by bondholders, the company, and Trump; the other, by Icahn and Beal Bank Nevada.

This week, the bondholders and Trump Entertainment laid out a restructuring plan that would inject $225 million in equity into the company and place about 5 percent of the firm with Trump himself, with rights to buy an additional 5 percent. It also would guarantee the continued use of the Trump name on the casinos.

Next week, Icahn Partners L.P., a hedge fund controlled by Icahn, will present a plan that offers $484 million to pay off first-lien notes in exchange for 100 percent equity and that would eliminate all debt.

Trump Entertainment filed for Chapter 11 bankruptcy protection Feb. 17, 2009, four days after Trump and his daughter resigned from its board of directors.

Yesterday, Trump testified that he was originally aligned with Beal Bank and its founder and president, Andy Beal, against the bondholders for control of the firm.

"Carl came along and bought the debt at a discount," Trump said. "I was shocked there was no deal done, and he [Beal] had sold the debt to someone else."

A significant factor in the bankruptcy case is the value of the Trump brand to the casinos and Atlantic City.

Personal-service agreements that pay Donald Trump $2 million a year for a certain number of appearances have been in effect since 2005. But it was revealed that Trump had not received a payment since January 2009, and that, according to him and his attorneys, the licensing agreement to use his name had terminated as a result.

Trump said he was not prepared to allow another party - other than the bondholders - use his name.

He also clearly is not prepared to leave the Jersey Shore behind: "I have a special place in my heart for Atlantic City. Atlantic City will reach new heights when the economy turns around."

On cross-examination, Icahn attorney Jeffrey Jonas grilled Trump on whether he had seen the latest Atlantic City casino revenues, which show double-digit declines from a year ago.

Trump said he had not, but was confident that "things would turn around."

"When is that?" Jonas asked sardonically.

"I feel the economy and Atlantic City are coming back," Trump said.

But his restraint quickly dissipated when Jonas asked about Trump Entertainment's three trips to Bankruptcy Court (the first was in 1992), and how Trump was involved in all three as chairman, chairman/chief executive officer, or board member.

"Mr. Icahn has been involved in many bankruptcies as well, from Marvel Entertainment to the Sands" in Atlantic City, Trump shot back.

If Icahn prevails, Trump Entertainment and the bondholders argue, it would give him undue influence in the market. Icahn and Harrah's Entertainment Inc. would control eight of the 11 casinos in Atlantic City. Icahn took over the Tropicana last summer for $200 million in a bankruptcy auction.

On Wednesday, bondholder witness Martin Perry, a professor of economics at Rutgers University who focuses on market concentration, said the Icahn plan could create "undue economic concentration," as defined by state gambling regulators.

Icahn, who appeared in a video Tuesday as part of his attorneys' opening remarks, has owned a broad array of companies, including oil firms and airlines. He has been on a casino-buying spree and now owns nine in four states.

"I think casinos are overdone as far as the price goes," Icahn said in an interview last week. "I like buying when no one else wants them. That's where you get the bargains."

But even as he and his daughter headed for a waiting sedan, Trump again knocked Icahn for his thriftiness.

"He doesn't spend money. If Carl spends 10 cents, it's a major event."