he case goes back a year. Trump Entertainment Resorts, a company that owns three casinos that bear Trump's name but is not now under his control, filed for bankruptcy in February 2009. There were efforts to come up with a single plan that would pay creditors and set a course for the company's future. But they never came together.
Now, U.S. Bankruptcy Judge Judith Wizmur is being asked to choose between two rival plans and decide which group of creditors should get control of the casinos.
Lawyers say the hearing will likely last about four days. Trump is expected to testify later in the week; Icahn is not expected to testify.
On one side are a group of bondholders who have the support of the casino company, a casino workers' union - and Trump.
Under the proposal, the bondholders would contribute us$ 225 million in cash to jump-start the company, the management team would remain the same, the Trump name would remain on the buildings. Trump and his daughter Ivanka would get a 5 percent stake in the company, and more reason to ensure they'd help the business succeed.
"It saves jobs, it makes vendors happy, makes customers happy and keeps these casinos as a functioning entity in Atlantic City," said Kristopher Hansen, a lawyer for the bondholders group.
But there's one group that would not win under that plan: the first-lien creditors who say they have the legal right to be paid before the bondholders group. They would not be paid the full value of their debt.
The group that bought that first-lien debt last year: Icahn Partners.
Icahn, a Trump rival who bought Atlantic City's Tropicana Casino and Resort out of bankruptcy last year, bought first-lien debt with the idea of taking over the company.
Icahn is teamed up with Beal Bank, run by Andy Beal, a Texas entrepreneur and poker-playing legend who for a time last year sided with Trump on a plan to take over the casinos.
Icahn's lawyer, Jeffrey Jonas, says their plan would eliminate the casino company's debt and contribute more than us$ 600 million in equity. But other bondholders, who own second-lien debt, don't like that idea because they say they'd get squeezed out of what they're owed. They also characterize Icahn as a bankruptcy turnaround artist who only wants to make good on his investment and doesn't care whether the companies he buys last in the long-run.
He owned the Sands Hotel & Casino in 2000, then sold it six years later to Pinnacle Entertainment Inc., which razed the building with the idea of putting up a new bigger hotel on the property but never did. The bondholders lawyers used a photo of the vacant Boardwalk lot to caution the judge about what going with Icahn might mean.
Both sides suggest their adversaries could struggle to get the needed state Casino Control Commission licenses. The bondholders include eight institutional investors that could need clearance to be involved, while an Icahn win would mean he would control four of the city's 11 casinos - maybe too many for regulators' taste.
The Icahn side points out that this is the Trump casino company's third time in bankruptcy - and raises questions about its fitness to run a business. Jeffrey Jonas, a lawyer for Icahn Partners, said in his opening statement that Trump Entertainment has missed its financial projections nine of the last 10 years, that it's already falling behind this year, that the company could run out of cash as soon as April, and that it's long-term projections are overly rosy, too.
"I urge the court not to be fooled," Jonas said. "Buying into these projections is the recipe for another trip back to bankruptcy court." Jonas said he believes Icahn could legally use the Trump name even without the mogul's consent. And if not, he says, the business would be in so much better shape that it might not matter.