Burned out lights can be seen as a woman passes Trump Plaza Hotel & Casino on the boardwalk Sept. 16, 2014, in Atlantic City, N.J.
 
Associated Press
Carl Icahn holds all the cards at the Trump casinos in Atlantic City, and the question is, will he hold ‘em or will he fold ‘em?
As a secured lender who’s owed $285 million plus interest, he’s in a prime position in the Trump Entertainment Resorts Inc. Chapter 11 case, which began Tuesday and is speeding toward a possible shutdown of the two casinos on the Atlantic City Boardwalk still bearing the name of rival billionaire Donald J. Trump.
Trump Plaza closed Tuesday, but there’s a chance Trump Taj Mahal, the larger and more successful of the two, can be saved. Court papers pin that hope on concessions from Unite Here Local 54, the union that represents thousands of Atlantic City casino workers.
Union chief Bob McDevitt said the Taj Mahal negotiating committee looks forward to talking to the new owners, but voted a unanimous “no” to cuts asked by current management.
Mr. Icahn isn’t saying, but Boardwalk observers and industry analysts believe there’s a chance Trump Taj Majal is worth saving. Minus the need to pay $38 million in annual debt service, minus the corporate overhead of Trump Entertainment Resorts Inc. and without the drag of ailing Atlantic City sister Trump Plaza, the Taj Mahal could turn a profit.
Trump Entertainment attorney Kristopher Hansen pointed out that there’s also the matter of the secured debt to be resolved, even if the union does an about-face. Carrying costs on the debt are about $38 million annually. That’s money that has been going into Mr. Icahn’s pocket, until recently, when distress on the Boardwalk mounted and Trump Entertainment found itself without more extra stuff to sell.
The company has a couple months of cash left, no bankruptcy loan, and it’s in a gambling market that’s so sad even the glitzy new Revel went begging for a buyer. Built at a cost of $2 billion, Revel’s tower of glass and steel is going to auction with a $90 million starting offer.
In the Trump Entertainment case, no one’s even talking about a sale. Mr. Icahn can use Chapter 11 to get out from under a lot of obligations, then seize what’s left, including the Trump Taj Mahal, if he wants it.
His companies also control Tropicana Casino & Resort Atlantic City, a competing Boardwalk property. In the last Trump Entertainment Chapter 11 case, that was used against him by opponents who predicted he’d shut the Trump casinos to funnel business to the Tropicana.
In that Chapter 11 proceeding, from 2009 and 2010, Mr. Icahn “lost” the battle for control of the casinos to a coalition led by Donald J. Trump and Avenue Capital’s Marc Lasry, who likes to play poker. Trump Entertainment’s owners also include Contrarian Capital Management, Kings Road Holdings and other investment funds. Avenue Capital has not responded to requests to comment on Trump Entertainment.
Mr. Icahn bought the Trump Entertainment debt at a discount during the previous Chapter 11 proceeding, when banker Andrew Beal came to a parting of the ways with Mr. Trump. Mr. Icahn quickly recouped $125 million of his investment from a capital-raising effort by the bondholders. Court records indicate that Trump Entertainment paid down tens of millions of dollars of the loan principal during the years between bankruptcies, in spite of the gambling company’s growing distress.
Write to Peg Brickley at peg.brickley@wsj.com