Tropicana Atlantic City files bankruptcy, plans to sell casino to lenders for $200 million

By Caroline Salls

Pittsburgh, April 29 - Tropicana Atlantic City Casino and Resort and wholly owned subsidiary Manchester Mall, Inc. filed for Chapter 11 bankruptcy Wednesday in the U.S. Bankruptcy Court for the District of New Jersey to complete the proposed $200 million sale of Tropicana's casino and resort, according to a company news release.

The company said the New Jersey Casino Control Commission gave its approval Wednesday for court-appointed trustee and conservator Gary S. Stein to enter into a stalking horse agreement under which Tropicana's pre-bankruptcy lenders will purchase the casino and resort through a newly formed entity in exchange for the cancellation of at least $200 million of their secured claims.

The sale is subject to customary conditions and an auction process.

According to the release, the proposed bidding procedures would require interested parties to submit binding offers to acquire the Tropicana within 30 days. The company said the auction would be held within one week of the bid deadline.

"We have initiated the Section 363 [sale] process in order to complete a sale of the Tropicana in an orderly, efficient and legally binding manner," Stein said in the release.

"By starting out with a stalking horse bid and providing for an auction to facilitate competitive bidding by other qualified buyers, this process is intended to achieve the highest price possible in light of current conditions in the gaming industry."

First-day motions

In conjunction with the bankruptcy filing, Tropicana has filed customary first-day motions seeking court orders to help ensure the stability and the uninterrupted operation of the casino and resort.

The first-day motions include requests to provide employee compensation and benefits as usual, to pay vendors in the ordinary course of business for goods and services provided after the filing and to honor customer obligations.

"The Tropicana is open and conducting business as usual, and we fully expect to continue to operate in a smooth and uninterrupted manner during the sale process and the transition to the new owners," president and chief operating officer Mark Giannantonio said in the release.

"The Tropicana has ample financial resources to satisfy customary obligations associated with ongoing operations of the business, including the timely payment of employee obligations, normal operating expenses and other obligations."

Tropicana has requested court approval to use the cash collateral of its operating company lenders to pay business expenses during the bankruptcy process.

Debt details

According to court documents, Tropicana has between $500 million and $1 billion in both assets and debt.

The company's largest unsecured creditors include:

• Indenture trustee Wilmington Trust Co. of Wilmington, Del., with a $995.68 million 9 5/8% senior subordinated notes claim;

• GAB Robins North America Inc. of Cherry Hill, N.J., with a $1.69 million trade claim;

• Casino Reinvestment Development Authority of Atlantic City, N.J., with a $1.66 million claim;

• Casino Control Commission of Atlantic City, N.J., with a $1.27 million claim;

• AC Coin & Slot Service Co. of Pleasantville, N.J., with a $1.05 million trade claim; and

• IGT, based in Chicago, with a $1.03 million trade claim.

The Tropicana is one of the largest casino hotels in Atlantic City. Its Chapter 11 case number is 09-20711.

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