Many people have lost their means to discretionary income due to the recession, which equates to fewer people spending money on luxury items and gambling. The downturn of the economy has had a major impact on the New Jersey gambling scene, causing two casinos to file for Chapter 11 bankruptcy protection already this year. A third may be soon to follow in an attempt to restructure and become more attractive to a new buyer.
Trump Entertainment resorts -- which controls Trump Plaza and Trump Taj Mahal -- may be filing for bankruptcy due to its dropping revenue and mounting debt. Based on a recent filing with state regulators, the Trump subsidiary was more than $285 million in debt. The Trump Taj Mahal told regulators that it will have to indefinitely postpone payments on its property taxes. A casino analyst for Fitch Rating reported that the subsidiary went into forbearance because it was unable to continue making interest payments.
A quarterly report for the Trump Taj Mahal indicated that the company may be restructuring in the near future. If the property does not begin to a see a surge in business, it will be difficult to stay in operation. The Trump Plaza is expected to close in the middle of September, but the Taj Mahal is projected to stay open because it is still turning a profit.
According to the analyst, filing for bankruptcy is not a definite indication that a business is going to close. It can be seen as an opportunity to restructure and become more organized. This could lead to the New Jersey business coming out of filing for Chapter 11 even stronger than it was initially. He also indicated that this process may allow the company to get rid of some of the debt and have the ability to cancel unprofitable contracts and renegotiate others. Businesses who are confronting financial difficulties can turn to Chapter 11 as a solution to help them get back on their feet, become better organized and emerge in a better position for the future.
Source: pressofatlanticcity.com, "Could Trump Taj be the next casino to go bankrupt?", Reuben Kramer, Sept. 4, 2014