Wednesday, Jan. 5, 2005 | 9:35 a.m.
CAMDEN, N.J. -- A judge on Tuesday ordered Trump Hotels & Casino Resorts to open its books to a group of shareholders who say the company's Chapter 11 reorganization gives short shrift to investors while rewarding the man partly responsible for its second slide into bankruptcy.
Granting requests by shareholders, U.S. Bankruptcy Court Judge Judith Wizmur ordered Trump's casino company to provide updated reports on cash flow and financial forecasts for the company and its affiliates.
She also ordered Trump to make its financial adviser available to answers questions from lawyers for the investors, and put off final approval of a $100 million bank loan Trump lawyers contend is needed to help keep the dice rolling and the drinks flowing at Trump's three debt-laden Atlantic City casinos, which filed for bankruptcy court protection Nov. 21.
The move forced a successful, last-minute scramble by Trump to get deadline extensions from both Dallas-based Beal Bank -- which is providing the loan -- and two groups of bondholders whose participation in the pre-packaged bankruptcy proceeding hinged on court approvals due by Wednesday.
But it dealt a welcome hand to the Official Committee of Equity Security Holders, a seven-member panel that represents holders of about 44 percent of Trump Hotels' common stock.
The group formed last month to fight the reorganization, saying it was good for bondholders, unsecured creditors and Trump himself but bad for those who invested in Trump stock.
Under the plan, filed last month after months of negotiations between Trump and the bondholders, Trump's stake in the reorganized Trump Hotels company would be cut to 27 percent but he would remain chairman and chief executive officer.
But minority shareholders on whose backs Trump raised money were excluded from the pre-petition negotiations and are now being asked to accept a reverse stock split leaving them with ownership of .05 percent of the reorganized company, according to equity committee attorney Steven Yoder.
"They didn't acknowledge that the man who ran these companies into bankruptcy a second time was unwilling to take the same diminished value," Yoder said.
Yoder told Wizmur on Tuesday that Trump's company had resisted his requests for updated financial information and hadn't proved the company needs the $100 million to get by while in bankruptcy.
Wizmur agreed they were entitled to the fiscal data.
"How can we say anything or do anything without it?" said committee member Philip Sternberg, a retired beauty salon owner from Brigantine.
Wizmur, who gave interim approval to the loan Dec. 15, before the equity committee was formed, delayed formal OK until UBS Investment Bank adviser J. Soren Reynertson submits to questioning about the post-filing performance of the Trump casinos.
Trump's representatives were unfazed by the ruling. The casinos remain open and the company will likely emerge from bankruptcy by the end of March, they said.
"We don't view it as a monkey wrench at all," said Robert Pickus, general counsel.
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