Judge grants Taj Mahal bid to void labor contract and stay open

ATLANTIC CITY, N.J. (AP) — A federal bankruptcy court judge voided the labor contract at Atlantic City's Trump Taj Mahal casino, raising hopes that the gambling hall and its 3,000 jobs could be saved.

Judge Kevin Gross in Delaware granted a request Friday by Trump Entertainment Resorts to terminate its contract with Local 54 of the Unite-HERE union.

The company and billionaire investor Carl Icahn said the casino can't survive without shedding costly pension and health care obligations.

Icahn would acquire the casino and pump $100 million into it, if he gets $175 million in state aid.

Voiding the union contract was a key part of the plan to keep the Taj Mahal open.

Trump Entertainment had threatened to shut the casino on Nov. 13 if the judge ruled against it.

Trump Taj Mahal Casino Resort (AP Photo/Wayne Parry, File)

Allan Brilliant, a lawyer for Icahn, told U.S. Bankruptcy Judge Kevin Gross on Tuesday that Trump Entertainment needs the financial relief that breaking the union contract would provide.

Trump Entertainment had threatened to close the casino by Nov. 13 if it could not shed its pension and health care obligations to the Taj Mahal's 3,000 workers.

"If you don't grant the ... motion, it's just not viable as a business," Brilliant said Tuesday. "Ultimately very quickly the casino will close. This is the window here; the window is open."

Icahn, who owns the Taj Mahal's $286 million in debt, would swap that debt for ownership of the casino, and invest $100 million into it. But that investment is contingent on massive government aid from Atlantic City and the state.

The company says it needs big union concessions and massive tax breaks from Atlantic City and New Jersey - both of which already have rejected the demand. It originally sought to have Atlantic City lower its property tax assessments by nearly 80 percent, to have the state contribute $25 million in tax credits, and for union workers to give up their pension and health insurance. It would provide $2,000 stipends for workers to find their own coverage under the Affordable Care Act.

After getting a negative reaction from Atlantic City Mayor Don Guardian and state Senate President Steve Sweeney, the company revised its financial request from the state. It is now seeking $175 million in relief through a so-called PILOT program- payments in lieu of taxes - and the receipt of two types of state economic grants not usually available to casinos: the Economic Redevelopment Grant and the Urban Revitalization Grant. State legislators would have to vote on letting the casinos into the program.

The Taj Mahal would be the fifth of Atlantic City's 12 casinos to close this year. Its lawyers said the casino's financial situation is so dire that it has been selling used mattresses and televisions from the closed Trump Plaza casino to generate extra cash.