Carl Icahn, the business magnate that came up with a plan for preventing the closure of the emblematic Atlantic City-based casino Taj Mahal, ran into an unexpected challenge on Friday, as his proposal for terminating the payments for the pension funds of the casino employees was rejected by the Court.
Mr. Icahn has invested a huge amount of money (a total of $100 million) in the gambling venue with the aim of helping it become thriving and competitive again. However, in exchange for his generosity, Mr. Icahn demanded the casino staff to make some serious compromises, such as substituting their pension plans with a 401k scheme and giving up on the health benefits, which every reputable employer traditionally offers.
Taj Mahal is to be shut down within a month, in case these or any other adequate measures are not taken. Thus, it will become the fifth Atlantic City-based venue to file for bankruptcy in 2014.
Those who support the idea of Carl Icahn say that the changes in the pension plan payments will result in an increased amount of savings. The expected sum is more than $3.5 million per year.
However, Kevin Gross, the U.S. Bankruptcy Judge who was in charge of making a proper decision over Mr. Icahn’s claims, said that he was not authorized to put an end to a specific agreement, made by the employees and the owner of Taj Mahal. Nevertheless, the Judge pointed out that Mr. Icahn will be given another chance to achieve his goal. During the next Court hearing, scheduled for October 14, Judge Gross will consider terminating the labor agreement between the casino workers and Taj Mahal.
According to Mr. Icahn’s proposal, if all the steps included are strictly followed, the property will be granted a $30-million tax relief. Although it sounds like the most sensible solution for the time being, the mayor of Atlantic City, Don Guardian, defined it as “unworkable”.
Another requirement that Mr. Icahn posed was to receive the sum of $25 million in cash either from the so-called Casino Reinvestment Development Authority or some other state organization. Yet, this, too, does not seem likely to happen.
It is a well-known fact that the Showboat, Atlantic Club, the Trump Plaza, and Revel had a quite dramatic fate. However, the new owners of the Revel Casino have recently announced that they will do their best to re-open the property in the foreseeable future.
