Monday, May 5, 2008 | 6:33 p.m.
Today’s news that Tropicana Entertainment is filing for Chapter 11 bankruptcy protection comes on the heels of a much-publicized slowdown that has uncovered the myth that gaming is a recession-proof industry.
And yet, the bankruptcy petition has little to do with the economy and isn’t for reasons a handful of casinos in years past have been forced into bankruptcy.
Tropicana Entertainment, which owns the Tropicana casino in Las Vegas, lost its biggest asset when New Jersey regulators removed the company’s gaming license at the Tropicana in Atlantic City, which is in the process of being sold. That triggered a lawsuit by bondholders seeking immediate repayment.
Without the Atlantic City casino, the company says it can’t afford to pay its debt obligations. Bankruptcy will give the company some relief.
“There were other alternatives but this is the best one,” Tropicana President Scott Butera said. “People feel the assets are valuable and the way you maximize value is to work through a restructuring process.” As an executive with Trump’s casino company, Butera organized the restructuring of that company out of bankruptcy a few years ago.
By contrast, the Trump casinos in Atlantic City, as well as the Aladdin and the Stratosphere in Las Vegas, filed bankruptcy for reasons many other businesses do – because they lost money.
Butera said the company is still generating positive cash flow from its casinos and has lined up $67 million in financing to run its operations. Casino operations will be "business as usual" during the restructuring process, he said.