Appeals Court: Trump Taj Mahal Can Strip Union Benefits

It's a victory for billionaire Carl Icahn, who has a plan to take control of the casino as it exits Chapter 11 bankruptcy.

Trump Taj Mahal in Atlantic City

Photo | Dan McQuade

A federal appeals court has ruled that Trump Entertainment — the parent company of the Trump Taj Mahal in Atlantic City — can strip pension and health benefits from about 1,100 union workers at Trump Taj Mahal. The fight may not be over: Previously, UNITE-HERE Local 54 said it would appeal to the Supreme Court if it lost at the appeals level.

Trump Entertainment Resorts no longer has a connection to Donald Trump other than an agreement to use the name. If the union decides not to appeal to a higher court or exhausts its appeals, the company will execute its plan to emerge from bankruptcy: Trump Entertainment’s chief lender, Carl Icahn, will take over the company.

Icahn has said he plans to invest millions in order to renovate the property, which opened to fanfare in 1991 but is now by far the dingiest casino down the shore.

“Under the policies of bankruptcy law, it is preferable to preserve jobs through a rejection of a CBA, as opposed to losing the positions permanently by requiring the debtor to comply with the continuing obligations set out by the CBA,” U.S. Circuit Court Judge Jane Roth wrote. “Moreover, it is essential that the Bankruptcy Court be afforded the opportunity to evaluate those conditions that can detrimentally affect the life of a debtor.” Basically, the judges agreed with Icahn’s argument that the casino would not be able to stay in business without cutting union benefits.

Icahn is also chairman of the company that owns the Tropicana casino at the other end of the boardwalk in Atlantic City. That casino recently underwent a $50 million renovation.

Follow @dhm on Twitter.