Baxter & Baxter, LLP | Portland Oregon Bankruptcy

Associated Press “I don’t like the ‘b’ word,” Donald Trump declared Thursday from the witness stand in a Camden, N.J., bankruptcy courtroom, explaining why the gambling company that bears his name is now on its third pass through Chapter 11. Rushed, pre-arranged financial restructurings, “very quick in and out,” left Trump Entertainment Resorts Inc. with more debt than it could bear, the company’s former chairman said. “The mistake of the first two cases, the debt should have been cut more,” Trump said, adding, “This time, the debt is being cut by a lot.” Exactly where the cut will come is up to Judge Judith Wizmur, who must choose between a plan that gives the company to secured lenders, Carl Icahn and Andrew Beal, or one that gives the company to bondholders, with Donald Trump clinging to as much as 10%, a reward for allowing bondholders to use the Trump brand. Icahn and Beal want to leave behind $1.25 billion in bond debt. The bondholders are putting up fresh cash to pay off some of the bank debt and are offering to take on a new loan from Beal as they take over the company. Had Donald Trump’s original plan to pry the Trump casinos out of bankruptcy and split the company with Beal panned out, this case would have been as fast as the previous two, Trump said Thursday. “We thought this was going to be a quick and easy deal,” Trump said, explaining his decision to find favor with a bondholder-backed Chapter 11 plan. “It turned out that it wasn’t.” Under the original plan, Trump and Beal were each going to put up money to refurbish the casinos at the Atlantic City boardwalk. Combined with the $485 million Trump Entertainment Resorts Inc. owed Beal Bank, the new money was supposed to be enough to get the casinos back on their feet and out of bankruptcy, minus some $1.25 billion in bond debt. Instead, Thursday found Trump pleading the case of the bondholders, arguing they will do a better job than Icahn and Beal could at piloting the company out of Chapter 11. Icahn’s companies have racked up “many, many bankruptcies,” Trump said. Last year, when the credit markets were frozen and the economy was on the point of collapse, only Beal and Trump seemed interested in salvaging the casino operation. The developer noted that the company had some spare cash to aid in its own rescue. Specifically, Trump Entertainment had “$175 million that was sitting there waiting to be spent on bathrooms and on lobbies,” Trump said. Then came a flurry of activity in the bankruptcy case, as Avenue Capital Management led a charge of bondholders against Trump and Beal. “Many of the people in this room sucked the blood out of this company,” Trump said, looking at the assembled attorneys and financial advisers who had billed “millions and millions of dollars” to the beaten-up company.  Trump admitted that, OK, a few other factors may have contributed to the erosion of spare cash at the gambling company, like the recession and competition from slots parlors in nearby states. But it was the desire to put a lid on the financial damage of bankruptcy that drove him into the arms of bondholders, he said.

In 2008, we saw many near-term ripple effects from the Lehman Brothers bankruptcy, such as the near collapse of the world markets and the plunging value of the dollar. Now, almost a year and a half later, there’s one more victim to add to the list. China Club – which some would have us believe was the  hottest club ever to hit Manhattan – sought Chapter 11 protection Wednesday, branding its balance sheet the most recent casualty of the Lehman bankruptcy. The investment bank’s employees were “regular customers at the club,” according to court papers filed by Nightlife Enterprises LP, the company that runs the hot spot. With fewer investment bankers loosening their ties at the bar and buying up martinis en masse, China Club’s finances surely suffered. And it wasn’t just nightly traffic that slowed; the venue’s private-party revenue also took a dive. “The debtor’s catering and corporate event business also greatly suffered from the economic downturn and recession plaguing Wall Street and Manhattan in general,” Nightlife Enterprises said. The club’s problems worsened in 2009, as Nightlife Enterprises took on $1 million in debt to pay for the “renovation and upkeep” needed to keep the club chic. Unable to repay the loans, and weighed down by a lawsuit from an unidentified party, Nightlife sought bankruptcy protection. China Club opened up in New York during the 1980s and moved to its current 48 th Street location in 1997. It was soon drawing celebrities and packed crowds to its hip dance floor, lounge and VIP area. The business has had some legal troubles along the way though. In 2007, China Club was named in a class-action lawsuit that accused it of holding “Ladies’ Night” promotions that discriminated against men by offering free drinks and admission to women, according to Bloomberg News . The case was eventually dismissed by a district-court judge.

Associated Press There will be no Blue Light Special discount for former Kmart chief executive Charles Conaway, who was ordered Thursday to cough up more than $10 million for misleading statements he allegedly made to investors in the months before the retailer filed for Chapter 11 protection in 2002. In a 70-page decision, U.S. Magistrate Judge Steven Pepe required Conaway to repay a $5 million loan he received from the company, plus interest and fines, the Associated Press reported . Last year, a jury found Conaway liable in a federal civil trial. The Securities and Exchange Commission said Conaway hid Kmart’s crumbling finances by failing to tell investors that the retailer was delaying payments to suppliers in order to stock pile cash. The charges mainly stemmed from Conaway’s call with Wall Street analysts in November 2001 and the company’s quarterly filing with regulators. In that call, Conaway reported sliding sales but did not disclose the changed vendor payment policy or an ill-timed purchase of $800 million in merchandise. In court, Conaway said that it never crossed his mind that he was withholding critical information. Investors’ negative reaction to the quarterly report “would have been significantly worse” had Conaway made disclosures about “the magnitude of the liquidity crisis including its extensive slow-pay systems,” the judge wrote. Pepe denied the SEC’s request to bar Conway from serving as an officer at another public company, saying the fines and damage to his reputation were deterrent enough from committing future violations. Conway was forced out of Kmart as the company emerged from bankruptcy protection in 2003 under the control of investor Edward Lampert. The following year Kmart merged with Sears, Roebuck and Co., creating Sears Holdings Corp.

Mall owner General Growth Properties Inc. Wednesday unveiled deal to exit bankruptcy backed by Brookfield Asset Management Inc. as Australian mall owner Westfield Group mulled a bid for the company, The Wall Street Journal reports . Lehman Brothers Holdings Inc. and J.P. Morgan Chase & Co. have reached a deal that tentatively settles a $7.68 billion claim J.P. Morgan has against Lehman following the investment bank’s bankruptcy filing, WSJ reports . White Birch Paper Co., the second-largest newsprint manufacturer in North America, Wednesday filed for protection from creditors in the U.S. and Canada, as waning newspaper readership drags down demand for its product. Read the Daily Bankruptcy Review story here . General Motors is shutting down its Hummer brand after a deal to sell it to a Chinese equipment maker collapsed, WSJ reports . John C. Erickson, the founder Erickson Retirement Communities, plans to step down as chairman of the company after it emerges from bankruptcy protection, according to the Baltimore Sun . Station Casinos Inc. has reached a deal with key lenders that the company hopes will hasten its exit from bankruptcy protection, the Las Vegas Sun reports . The bankruptcy judge overseeing Greektown Casino’s Chapter 11 case signed off this week on a settlement between the casino and the city of Detroit, according to the Detroit Free Press .