Foreclosures are Mauling Tropicana Casino and Resort

March 2nd, 2009 | Tags: Foreclosures

Foreclosures are getting more and more ambitious each day. Previously it used to knock on the doors of residential houses but now it has become emboldened to maul fancy joints like Tropicana Casino and Resort.

Carl Icahn is a billionaire who once owned Sands Casino Hotel that is now defunct. He is the one among few who will try his luck to bid for this Atlantic City casino once it goes up for a foreclosure auction.

Atlantic City is struggling with the continued recession. People hardly have money to gamble and take risks. Then there is competition from new swank glitzy parlours coming up in Pennsylvania and New York. A person who is an authority on casinos recently stated that out of the 11 casinos in Atlantic City, 10 are laying off staff at an alarming rate.

Gilbert Brooks is the legal representative of Icahn and other lenders who hold a mortgage of $1.4 billion on the Tropicana. They are agreeable to making an offer known as stalking horse. This means offering a minimum amount in the bankruptcy court auction, which other bidders can then exceed. If none does so then the stalking horse wins the property.

The sale is expected to be authorized soon by the Casino Control Commission of the state. It oversees the licensing and regulating of the industry. But the sale has been postponed for a month because of negotiation talks emanating from the lenders about to materialize. In all probability the bankruptcy auction will take place on 18th March.

From December 2007 Tropicana has been under the supervision of a conservator appointed by the state. When the former owners discharged about 1,000 employees the casino licence had to be revoked because of surfacing of problems relating to services, cleanliness and other regulations linked to the running of casinos. Conservator Gary Stein was a retired Supreme Court judge. He had selected Cordish Co. based in Baltimore as a potential purchaser. But both the sides have not yet reached an agreement that would be satisfactory to the senior lenders; the latter has the power to block it in court.

Sein Mack, the attorney for Stein said that the chairperson of the company, David Cordish is still interested in Tropicana. In 2008 Cordish offered $700 million but since then he has lowered the amount because of the economic slump. Till date he has not come forward with another figure.