NJ Denies Request for Tropicana Owner to Get Title Back
- Apr 04, 2008
Nearly four months after the New Jersey Casino Control Commission pulled the casino license from the owner of the Tropicana Hotel Casino in Atlantic City, the commission this week denied a bid to return the title to the unlicensed owner, Adamar of New Jersey.The request had come from Gary Stein, a retired New Jersey State Supreme Court Justice who the commission had named as conservator of the property after ruling Dec. 12, 2007, that the company that owned Adamar, Tropicana Entertainment L.L.C., was not qualified to own a casino hotel in Atlantic City. Once a license has been taken away, the only way for a casino to legally operate in New Jersey is through a trustee. Stein had argued Wednesday that refusing to transfer the assets back to Adamar was pushing the owner into bankruptcy and making it difficult for him to sell the property.In a 17-page ruling, the commission chairperson, Linda Kassekert, denied the request and said it is “in direct conflict with the provisions of the Casino Control Act,” according to a commission press release. “Justice Stein envisions that bankruptcy will shortly ensue unless he is allowed to reconvey the title. Contrary to the justice’s dire predictions, several casino licensees have successfully navigated through bankruptcy and survived,” Kassekert stated. She described Stein’s attempt to return the title to Adamar as “misplaced” and added that it “must fail.” Kassekert also wrote that, “Whatever attendant delay it may cause in the sale process cannot justify granting Justice Stein’s petition.”Stein’s request stems from a lawsuit filed in January by Wilmington Trust Corp. in Delaware on behalf of bondholders that blamed Columbia Sussex Corp., the parent company of Tropicana Entertainment, for the mismanagement that led to the commission’s decision to pull the license late last year, according to a story by Suzette Parmley in Thursday’s Philadelphia Inquirer. That lawsuit claims Columbia-Sussex had defaulted on a $960 million debt note.In the sternly-worded ruling, Kassekert criticized Stein for drawing the commission into the Delaware litigation. “As for the timing of Justice Stern’s application, which follows on the heels of the ruling in Delaware adverse to Tropicana Entertainment, it certainly appears that his application could be perceived to be for the benefit of Adamar’s disqualified parent companies,” she wrote. An Associated Press story by Wayne Parry quotes Kassekert as saying Columbia-Sussex president & CEO William Yung III should try to work out an arrangement with the company’s creditors. “We want to see this property sold and we don’t want to see a default,” she said. “But isn’t it up to Mr. Yung to cure his own default?”The commission did grant Stein a 60-day extension until June to complete the sale of the Tropicana. A Dec. 17, 2007, CPN story noted that Columbia Sussex had received numerous inquiries about the property. At that time the company spokesperson did not release any names, but on Jan. 10, CPN reported that Colony Capital L.LC. was apparently one of the bidders.The Tropicana, which opened on the Boardwalk in Atlantic City in 1981, has over 2,100 guestrooms and about 140,000 square feet of gaming space. Columbia Sussex, a Kentucky-based company that owns more than 80 hotels and 10 other casinos, including the Tropicana’s sister property in Las Vegas, bought Tropicana owner Aztar Corp. in 2006 for a reported $2.7 billion. Meanwhile, the Business Courier of Cincinnati reported this week that Columbia Sussex has signed an agreement to sell Casino Aztar in Evansville, Ind., to Eldorado Resorts L.L.C. for up to $245 million. The Indiana Gaming Commission must sign off on the sale of the riverboat casino. The newspaper noted that Columbia Sussex said in December it was selling Casino Aztar to help repay debt and avoid bankruptcy.