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Trump Taj Mahal unsecured creditor committee appointed; full list, contacts

trumptajThe U.S. Trustee for the bankruptcy court in Wilmington, Del., appointed an unsecured creditors’ committee in the Chapter 11 proceedings of Trump Entertainment Resorts, which as reported owns the Trump Taj Mahal in Atlantic City, N.J., court filings show.

The members of the committee and their contact information are as follows:

  • Thermal Energy Limited Partnership I (Attn: Patrick Towbin, 609-572-7107)
  • Bally Gaming, Inc. (Attn: A.C. Ansani, 702-532-7515)
  • Unite Here Local 54 (Attn: Donna DeCaprio, 609-344-5400 x139)
  • National Retirement Fund (Attn: Richard N. Rust, 401-334-4155)
  • Atlantic City Linen Supply, LLC (Attn: Eric Goldberg, 609-345-5888)
  • South New Jersey Paper Products (Attn: Martin Spector, 856-691-2605)
  • Conner Strong & Buckelew Companies, Inc. (Attn: Heather A. Steinmiller, Esq., 267-702-1366)


– Alan Zimmerman

 

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RSP Permian high yield bonds (B-/B3) price to yield 6.625%

rspRSP Permian this afternoon completed its debut offering of senior notes via Barclays, RBC, J.P. Morgan, and UBS. Terms were finalized at the tight end of guidance, along with a $50 million upsize. Proceeds will be used to repay amounts drawn under the revolving credit facility, with the balance used for general corporate purposes. Dallas, Texas-based RSP Permian is an independent oil and natural gas company focused on the Permian Basin of West Texas. The company trades on the NYSE under the symbol RSPP with an approximate market capitalization of $2 billion. Terms:

Issuer RSP Permian
Ratings B-/B3
Amount $500 million
Issue senior (144A)
Coupon 6.625%
Price 100
Yield 6.625%
Spread T+423
Maturity Oct. 1, 2022
Call nc3 @par+75% coupon
Trade Sept. 23, 2014
Settle Sept. 26, 2014 (T+3)
Bookrunners Barc/RBC/JPM/UBS
Co-Managers ABN/BOSC/Citi/Comerica/USB
Price talk 6.75% area
Notes Upsized by $50 million; first call at par +75% coupon.
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Walter Energy flips PIK-toggle switch on 11% high yield bonds; debt hits fresh lows

walter energy Walter Energy bonds hit fresh lows today after the company told investors that it plans to flip the switch and pay half of the Oct. 1 interest due on its PIK toggle bonds with additional securities instead of cash. The 11% second-lien PIK toggle notes due 2020 slumped around three points to a new low of 48/50, according to sources.

The uniquely structured 11%/12% partial-PIK toggle bond issue offers the issuer the choice to pay 100% in cash; at 50/50% cash/PIK; or at 75/25% cash PIK.

The company said in a filing late yesterday that it has elected the 50/50 option, and said the same will apply for the April 1 coupon, despite assurances from CEO Walter J. Scheller III during its quarterly earnings call in July that there were “no liquidity concerns in our company at this point.”

Walter Energy – which according to Nomura analysts has been burning cash at a rate of approximately $170 million a year – will save approximately $10.5 million by exercising this option.

Elsewhere in the capital structure, the company’s covenant-lite B term loan due 2018 (L+625, 1% LIBOR floor) slipped one point, to 89.5/90.5, for a net three-point loss week over week, while first-lien 9.5% notes due 2019 followed the same tack, to 90.25/91.25, according to sources. In unsecureds, the 9.875% notes due 2020 and 8.5% notes due 2021 tumbled roughly four points, to the high-20s, for an approximate net 11-point decline on the week, sources noted.

As reported, bonds backing Walter Energy initially hit a record low last week as concerns continued to mount over the company’s significant debt load and worsening fundamentals in the U.S. thermal coal market. (See “Arch Coal, Walter Energy fall to record lows on coal demand warning,” LCD News, Sept. 18, 2014).

Standard & Poor’s, which rates Walter Energy CCC+ with negative outlook, in its most recent rating report said it believes that the company’s debt burden is “unsustainable, adding that they view Walter Energy’s liquidity as “less than adequate.”

Moody’s rates the company Caa2 with stable outlook.

NYSE-listed Walter Energy produces metallurgical coal for the global steel industry, and also provides steam coal and industrial coal, anthracite, metallurgical coke, and coal-bed methane gas. The company trades under the symbol WLT, with an approximate market capitalization of $188 million. – Rachelle Kakouris

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Burger King eyes 5.75-6% pricing on $2.25B high yield bond offering

Price guidance on Burger King‘s $2.25 billion offering of 7.5-year (non-call three) senior notes is 5.75-6%. Books close at midday tomorrow, and pricing is expected late Wednesday or early Thursday via bookrunners Wells Fargo, J.P. Morgan, and Bank of America.

Proceeds back the restaurant chain’s acquisition of Tim Hortons.

As reported ($), Burger King last week launched the concurrent $7.25 billion secured credit facility. The deal includes a $500 million, five-year revolver and a $6.75 billion, seven-year covenant-lite B term loan, which is talked at L+350, with a 1% LIBOR floor, offered at 99-99.5. The term loan would include six months of 101 soft call protection. At current talk, the term loan would yield 4.67-4.76% to maturity.

S&P has weighed in with a B+ corporate rating and assigned a B- rating to the notes, along with a 6 recovery rating. The notes are 144A-for-life, with proceeds being used for the acquisition of Tim Hortons, and to partially fund the repayment of any and all existing debt at Tim Hortons and Burger King.

The transaction is subject to customary closing conditions, including approval of Tim Hortons shareholders and receipt of certain antitrust and regulatory approvals in Canada and the U.S. Since 3G Capital already owns roughly 70% of the shares of Burger King and has committed to vote in favour of the combination, no vote is required of Burger King shareholders – Matt Fuller

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Momentive noteholders appeal plan confirmation, but won’t slow implementation

The indenture trustees representing Momentive Performance Materials’ senior secured and subordinated noteholders each filed appeals to the bankruptcy court’s confirmation of the company’s reorganization plan on Friday.

The appeals were expected. In the short term, they will not slow down the company’s implementation of the plan, as Bankruptcy Court Judge Robert Drain has already denied motions to stay confirmation of the plan while the appeals played out.

As reported, the subordinated noteholders are appealing a ruling by Drain that the company’s subordinated notes are subordinate to, and not pari passu with, the company’s second-lien debt.

The company’s first-lien and 1.5-lien noteholders, meanwhile, are appealing, among other things, Drain’s ruling that they are not entitled to make-whole payments as a result of the repayment of the secured notes under the company’s reorganization plan, as well his determination that the interest rate on the replacement debt that is being issued to noteholders under the plan need not be at a market rate, but can be at the Treasury Rate (i.e., a risk-free rate) plus a risk premium of 1-3%, to satisfy the requirement of the cram-down process that secured creditors be paid in full.

Drain issued his ruling from the bench last month following a contentious four-day confirmation hearing (see “In cram-down fight, Momentive loses the battle, but wins the war,” LCD News, Aug. 27, 2014).

The appeal appears to be on a fast track for now, and has already been docketed with the U.S. District Court for the Southern District of New York. That said, it is worth noting that there is no legal requirement that the appeal be decided within any specific time frame.

According to court filings, trustees for the secured notes are seeking an expedited appeal proceeding out of concern that if the company is able to implement the reorganization plan before the appeal is resolved, the appeal could be blocked by the legal doctrine of “equitable mootness,” which in essence provides that an appeal of a confirmation order can be denied on the grounds that the reorganization plan in issue has already been “substantially consummated,” and undoing it would be inequitable or impractical. – Alan Zimmerman

 

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NII Holdings Ch. 11 filing lists assets of $2.89B, debts of $3.47B

nii-holdings-logoNII Holdings filed for Chapter 11 this afternoon in bankruptcy court in Manhattan, court filings show.

According to the company’s bankruptcy petition, NII has total assets of $2.89 billion and total debts of $3.47 billion.

 

The company listed the following debt securities held by more than 500 holders:

  • 10% senior unsecured notes due Aug. 15, 2016 – $800 million ($846.67 million outstanding as of Sept. 12.)
  • 8.875% senior unsecured notes due Dec. 15, 2019 – $500 million ($511.1 million outstanding as of Sept. 12.)
  • 7.875% senior unsecured notes due Aug. 15, 2019 – $700 million ($732.75 million outstanding as of Sept. 12.)
  • 11.375% senior unsecured notes due Aug. 15, 2019 – $900 million ($961.73 million outstanding as of Sept. 12.)
  • 7.625% senior unsecured notes due April 1, 2021 – $1.45 billion ($1.5 billion outstanding as of Sept 12.)

The company’s legal counsel is Jones Day.

Further information was not immediately available from the court filing. – Alan Zimmerman

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California Resources places $5B three-part high yield bond (BB/Ba1) offering

California Resources this afternoon completed the three-part offering of senior notes that backs its spin-off from Occidental Petroleum via bookrunners Bank of America, J.P. Morgan, Citi, Wells Fargo, Goldman Sachs, HSBC, Morgan Stanley, MUFG, and US Bancorp, according to sources. Terms were finalized at the wide end of guidance across the curve, but an early read from the gray market points to modest gains on the break. The BB/Ba1 deal includes a special call prior to Jan. 31, 2015 at par plus accrued interest if the spin-off from Occidental isn’t completed. In February, Occidental announced the separation of its California assets into an independent and separately traded company. Take note that at a combined $5 billion, the offering is tied with an HCA deal for the 11th largest transaction on record. Terms:

Issuer California Resources
Ratings BB/Ba1
Amount $1 billion
Issue senior notes (144A)
Coupon 5%
Price 100
Yield 5%
Spread T+321
Maturity Jan. 15, 2020
Call nc-life
Trade Sept. 11, 2014
Settle Oct. 1, 2014 (t+14)
Bookrunners BAML/JPM/Citi/WFS/GS/HSBC/MS/MUFG/USB
Co-Managers
Price talk 4.75-5%
Notes
Issuer California Resources
Ratings BB/Ba1
Amount $1.75 billion
Issue senior notes (144A)
Coupon 5.5%
Price 100
Yield 5.5%
Spread T+328
Maturity Sept. 15, 2021
Call nc-life
Trade Sept. 11, 2014
Settle Oct. 1, 2014 (t+14)
Bookrunners BAML/JPM/Citi/WFS/GS/HSBC/MS/MUFG/USB
Co-Managers
Price talk 5.25-5.5%
Notes
Issuer California Resources
Ratings BB/Ba1
Amount $2.25 billion
Issue senior notes (144A)
Coupon 6%
Price 100
Yield 6%
Spread T+346
Maturity Nov. 15, 2024
Call nc-life
Trade Sept. 11, 2014
Settle Oct. 1, 2014 (t+14)
Bookrunners BAML/JPM/Citi/WFS/GS/HSBC/MS/MUFG/USB
Co-Managers
Price talk 5.75-6%
Notes Net $5 billion transaction tied for 11th largest deal on record.
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Distressed Debt: Deluxe Entertainment, Endeavour join Restructuring Watchlist

Deluxe Entertainment Services Group andEndeavour International this week joined  LCD’s Restructuring Watchlist, which tracks companies with recent credit defaults or downgrades into junk territory, issuers with debt trading at deeply distressed levels, as well as those that have recently hired restructuring advisers or entered into creditor negotiations.

Deluxe Entertainment saw S&P cut the company’s credit rating three notches, to CCC from B, in late August. Trading at 95/97 prior to the downgrade, the term loan fell dramatically, to 87/89. S&P said it expects the company will violate its total-net-leverage covenant as early as Sept. 30 unless it receives an equity cure from its private equity owner or gets an amendment.

“If the company is unable to obtain an equity cure or if it uses an equity cure in consecutive quarters, we would likely lower the rating to ‘CCC-,” S&P credit analyst Peter Bourdon wrote in the August downgrade report.

S&P went on to cite various factors that left the company’s operating performance below expectations, as detailed in LCD’s Sept. 2 story. Deluxe, which is controlled by MacAndrews & Forbes, provides digital asset creation, management, and distribution services.

Endeavour International bonds traded lower in the first week of September after the company elected to skip interest payments due to bondholders on Aug. 30 and Sept. 1. This triggered restructuring negotiations for the typical 30-day grace period. It also resulted in S&P lowering credit ratings to D late on Sept. 5, from CCC. Endeavour’s first- and second-lien bond ratings were also cut to D, from CCC- and CC, respectively.

However, as noted in LCD’s Sept. 8 story, S&P at the same time raised recovery ratings on the debt. These positive expectations for the oil and gas exploration business were due to an “updated higher valuation of the company’s reserves.”  

 Rachelle Kakouris/Staff reports

 

Shown below, in its entirety, is LCD’s Restructuring Watchlist, as of Sept. 5, 2014.

                                  LCD Restructuring Watchlist

Issuer Industry Action pending Details
21st Century Oncology RTSX Healthcare services distressed securities July 21, 2014: Bonds plumb low at 55 on reports of a capital raise to avoid a covenant breach.
Allen Systems / ASG Software Software services skips coupon May 16, 2014: Skips May 15 bond coupon, cut to D.
American Apparel Retail seeks default waiver June 19, 2014: Co. seeks default waiver after firing CEO.
Caesars Entertainment Gaming restructuring negotiations July 29, 2014: TL slides despite cutting 2015 maturities.
Deluxe Entertainment Svcs. Movie production services downgrades Sept. 2, 2014: Co cut to CCC, from B, on concerns about a near-term covenant breach; TL slips to 88.
Dex Media Marketing downgrades May 13, 2014: Co. cut to CCC+ on tight covenants.
Education Management For-profit education restructuring negotiations Aug. 27, 2014: Co. unveils restructuring plan.
Endeavour International Energy E&P skips coupon Sept. 2, 2014: Co. skips Aug. 30, Sept. 1 coupon amid restructuring negotiations. 2L notes fall to 45.
EveryWare Consumer products in forbearance July 16, 2014: TL lenders extend forbearance to July 22.
FleetPride/FPC Holdings Wholesale distributor downgrades Nov. 26, 2013: Loan cut to B3 on weak performance.
Getty Images Multimedia distressed securities July 21, 2014: Bonds recover to 90 since reaching record lows at 72 after 3Q’13 report in November.
Gymboree Retail distressed securities July 14, 2014: Bonds fall to 62 after CFO quits.
iPayment Business services downgrades June 13, 2014: Co. cut to CCC, from B-, on possible covenant violation. Outlook is negative.
J.C. Penney Company Retail distressed securities May 15, 2014: Long bonds still in 80s despite 1Q gains.
Logan’s Roadhouse Restaurants downgrades Aug. 1, 2014:  Bonds trade at 73 after downgrade to Caa3.
MidWest Vanadium Mining skipped coupon Feb. 15, 2014: Enters 30-day grace after skipped coupon.
Milagro Oil & Gas Energy E&P in default Dec. 30, 2013: Cut to D after skipping 2nd-lien interest.
NII Holdings Wireless telecom skipped coupon Aug. 16, 2014: Bonds fall after co skips Aug. 15 coupon.
Preferred Sands Energy services in default Dec. 12, 2013: Cut to D, tripping default rate.
RAAM Global Energy Energy E&P in forbearance Aug. 4, 2014: Enters forbearance through Sept. 30.
RadioShack Retail distressed securities June 23, 2014: Bonds trade at record low 33.82.
Rue 21 Retail distressed securities June 11, 2014: Buyout bonds recover to 80 after results meet expectations, following test of record low 59 in May.
Sotera Defense Solutions Security technology covenant violations Nov. 26, 2013: Loan cut to CCC on covenant breach.
UniTek Global Services IT services hires advisors June 6, 2013: Co. hires Miller Buckfire amid forbearance.
Walter Energy Coal mining downgrades Aug. 14, 2014: Co. cut to SD after distressed exchange.
Waterford Gaming Gaming downgrades Apr. 23, 2014: Co. cut to CC on weakened cash flow.
Xinergy Coal mining hires advisors Nov. 13, 2013: DB is advisor for strategic alternatives.
Verso Paper Paper products distressed securities July 17, 2014: Bonds fall  after co. reveals inadequate participation in debt swap. Final deadline is July 30.
Source: S&P Capital IQ LCD

 

Contact Marc Auerbach for questions on the Watchlist or LCD Research.

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Bankruptcy court rejects Momentive noteholders’ bid to change plan votes

The bankruptcy court overseeing the Chapter 11 proceedings of Momentive Performance Materials today denied a motion by the company’s senior secured noteholders to change their votes rejecting the company’s reorganization plan to ones accepting the plan, blocking the noteholders’ effort to realize a cash recovery in the case rather than the replacement debt being distributed to them as a result of their rejection of the plan.

“Noteholders made the choice to vote against the plan,” Bankruptcy Court Judge Robert Drain ruled, “and they have not shown cause now to undo its consequences.”

The denial of the noteholders’ motions cleared away one hurdle to plan confirmation that was before the bankruptcy court this afternoon. Still being argued into this evening were several separate motions seeking to stay confirmation of the reorganization plan until the various appeals of Drain’s make-whole decision, and of his decision last month that the company’s subordinated debt was subordinate to, and not pari passu with, the second-lien debt, could be resolved.

As reported, Momentive’s reorganization plan contains a toggle feature under which, if holders of the company’s first- and 1.5-lien debt ($1.1 billion of 8.875% first-priority senior notes due 2020 and $250 million of 10% senior secured notes due 2020, respectively) voted to accept the plan, they would have received a cash recovery, but if they voted to reject the plan they would receive replacement debt.

The cash-recovery option, however, would not have included a disputed make-whole payment claimed by holders of the debt. As a result, both classes voted to reject the proposed plan, triggering the toggle provision and setting up a cram-down confirmation proceeding, in order to litigate the make-whole dispute.

The confirmation/make-whole hearing was held the week of Aug. 18, but right before Bankruptcy Court Judge Robert Drain was set to deliver his decision on the afternoon of Aug. 25, attorneys for the first- and 1.5-lien noteholders told him that enough noteholders had changed their votes that both creditor classes would now accept the plan. The attorneys argued that the vote change would entitle noteholders to the cash recovery to which they would have been entitled had they accepted the plan in the first place.

The company objected, however, saying, “There should not be a do-over” in plan voting, and the only thing that had changed between the confirmation hearing and the decision to change their votes was that noteholders had “read the tea leaves” and believed that Drain would rule will against them.

Still, the development was enough for Drain – who had previously expressed frustration at the failure of the parties in the case to settle their differences – to delay his ruling for twenty-four hours and give the company and the noteholders one final chance to arrive at a consensual deal (see “Momentive holders revote to accept plan, but co. says it’s too late,” LCD, Aug. 25, 2014).

That did not occur, and the next day Drain read a four-hour decision from the bench ruling against noteholders on the make-whole issue, although at the same time he refused to confirm the cram-down plan on the grounds that the interest rate of the noteholders’ replacement debt was too low to satisfy the cram-down requirement that noteholders receive payment in full.

Momentive filed an amended reorganization plan on Sept. 3, increasing the interest rate for the replacement notes, to comply with the ruling (see “Momentive files amended plan to clear path to cram-down confirmation,” LCD, Sept. 4, 2014).

The noteholders, meanwhile, filed formal motions seeking court permission to change their votes in the case. The motions argued that while the bankruptcy code required “cause” to justify the change in votes, that was a permissive standard that, under applicable case law, allowed creditors to change their votes on reorganization plans as long as they were not seeking to do so for an improper purpose.

But at today’s hearing, during a spirited back-and-forth with Drain, attorneys for the first- and 1.5-lien noteholders struggled to provide a reason for their vote change, beyond their desire to realize a better recovery for themselves in the case.

An attorney for the 1.5-lien noteholders, for example, argued that allowing noteholders to change their votes now would benefit the company because it would end appeals related to Drain’s make-whole and cram-down confirmation rulings, and end other pending litigation in the case. This benefit, the attorney argued, was sufficient to constitute “cause”.

In this context, the 1.5-lien noteholders argued that the attempted vote change did not constitute a “do-over” of the vote, as argued by the company, but rather an acceptance by the noteholders of the settlement offer contained in the plan, namely, the toggle provision that would distribute cash to noteholders if they voted to accept the plan. Noteholders argued that the settlement offer implicit in the plan’s toggle provision remained open until plan confirmation, which has yet to occur, but Drain was having none of it.

“Timing matters,” Drain said, noting at a different point in the proceeding, “It is a do-over. No question it’s a do-over.”

“That’s why it [the toggle provision] is called a fish-or-cut-bait provision,” Drain said. “That’s why it’s called a death trap.”

With respect to whether the vote change could constitute the acceptance of a settlement offer at this point in the case, Drain ruled, “It is crystal clear that the vote change is not a settlement. …I do not believe the offer is still open. If it were, the debtors would have accepted it.” In fact, Drain noted, Momentive has said the opposite — that if noteholders were permitted to change their votes the company would amend its plan to remove the toggle option that would pay noteholders in cash. – Alan Zimmerman

 

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Trump Taj Mahal files Chapter 11; could close by mid-November

trumptaj

Trump Entertainment Resorts filed for Chapter 11 this morning in bankruptcy court in Wilmington, Del., according to court filings.

The Chapter 11 was expected, as media reports circulated last week that a filing was imminent.

The company owns and operates two hotels in Atlantic City, N.J., the Trump Taj Mahal Casino Resort and the Trump Plaza Hotel. As reported, the Trump Plaza has already been slated to close on Sept. 16, and the Taj Mahal may not be far behind.

According to the company’s Chapter 11 filing, the Taj Mahal could close around Nov. 13 if the company is not able to reduce expenses there, primarily through labor concessions that the company has so far been unable to obtain.

It should be noted that the company’s founder, Donald Trump, is no longer associated with the operation of the hotels as a result of the company’s last Chapter 11 in 2009 (although he still holds about 5% of the company’s equity and warrants to acquire an additional 5%). Indeed, Trump recently sued to have his name removed from the company’s two hotels on the grounds that they were not up to his standards and were reflecting badly on his name.

Meanwhile, this is the company’s third trip to Chapter 11, with previous filings in 2004 and, as noted, 2009 (the Taj Mahal also went through a Chapter 11 in 1991, before the company was founded).

The company exited from its most recent Chapter 11 on July 16, 2010, setting the stage for today’s filing.

Under that reorganization plan, a group of second-lien lenders at the time, led by Avenue Capital, provided $225 million in new capital via a rights offering in exchange for 90% of the company’s equity, with 5% of the remaining equity distributed to second-lien lenders and 5% distributed to Trump personally. First-lien debt of some $486 million was exchanged for $125 million in cash and about $356 million in new first-lien debt.

According to an affidavit filed in the case by Robert Griffin, the company’s CEO, roughly $285.6 million in principal amount of the fist-lien debt remains outstanding, plus $6.6 million in accrued but unpaid interest. The debt is held by Carl Icahn.

Griffin attributed the company’s declining financial performance to oversaturation and competition in the Atlantic City casino market; lingering effects of recent weather events, including Superstorm Sandy in 2012, Hurricane Irene in 2011, and the June 2012 derecho; and “disappointing” online gaming results.

Looking ahead, the company said that it failed to generate needed excess cash flows during the past summer to subsidize its non-peak seasons, and the company is “now entering a period of several months where significant operating losses are expected.”

The company said that it missed a property tax payment of $10.8 million that was due on Aug. 28, and that it does not expect to have sufficient liquidity to make a $9.5 million interest payment due to first-lien lenders on Sept. 30.

The company said it had hired Houlihan Lokey in April to explore strategic and restructuring alternatives for the company. According to the Griffin affidavit, Houlihan Lokey reached out to the company’s secured lenders, online gaming partners, significant equity holders, and other parties in interest, but “none of the parties contacted expressed an interest in making an investment or in advancing credit to the debtors or purchasing either of the debtors’ casinos.”

Finally, Griffin said that in an effort to reduce expenses the company had engaged in negotiations with its largest union, and “provided a proposal that would facilitate a feasible business plan premised upon certain modifications” to the company’s labor agreements, but the union was unwilling to make the proposed concessions.

Griffin said the company would continue negotiations with the union, however, adding, “Absent expense reductions, particularly concessions from their unions, the debtors expect that the Taj Mahal will close on or shortly after Nov. 13, 2014 and that all operating units will be terminated between Nov. 13, 2014 and Nov. 27, 2014.” – Alan Zimmerman