Tropicana appeals loss of casino license in New Jersey

The regulators cited poor management practices, a lack of cleanliness and a failure to abide by state regulations after owner William J. Yung III laid off more than 1,000 employees.

Tropicana now accuses Garden State officials of "abuse of regulatory discretion" and a "lack of requisite neutrality and impartiality." The company is asking a New Jersey appellate court to throw out the decision, claiming regulators acted arbitrarily and "relied on ad hoc rulemaking and standard-setting."

New Jersey’s denial of the Tropicana Casino & Resort’s license was a severe blow to Yung’s budding gambling empire. State officials are actively seeking to sell the casino to another operator - likely at a loss to Tropicana Entertainment.

Meanwhile, the license denial threatened to trip a series of technical defaults of loans that Yung used to acquire Aztar Corp. for us$ 2.8 billion in early 2007, bringing the Atlantic City casino and its storied Las Vegas sister casino into the fold. Tropicana acknowledged in December it could be forced to file bankruptcy, but it negotiated for more time from its lenders.

Tropicana has also become the target of a us$ 960 million lawsuit by bondholders following the license debacle. The appeal comes months after the company sought to block implementation of the gaming commission’s ruling. Tropicana never succeeded in obtaining a hearing date on that legal petition.