Tropicana Casino Operator Files Bankruptcy

Published May 10, 2008 by OCR Editor

Tropicana Casino Operator Files Bankruptcy

Las Vegas landmark Tropicana has filed for bankruptcy protection, due to problems it has had with its Atlantic City operating license.

Tropicana Entertainment LLC, operator of 11 casino-hotels, has filed for bankruptcy protection under chapter 11.

What Happened
Perhaps the most famous landmark on the Las Vegas Strip for many years, Tropicana has run into financial trouble. Besides the implications this has on the entire gambling industry, on the Strip, and even for Las Vegas as a whole as it is dealing with the housing crisis, the news affects every one of the company's 11,000 employees.

Tropicana is a privately held company. It is based in Crestview Hills, Kentucky, and operates 11 casino-hotel properties in Nevada (including central casino region of Lake Tahoe), Mississippi, Louisiana, Indiana and New Jersey. Under state law, the latter property, the Atlantic City Tropicana, is offered to potential buyers.

Tropicana blamed its license problems in Atlantic City for its financial woes. The State judged it was unable to operate its property in Atlantic City die to layoffs and poor performance, and Tropicana lost its license following the decision on December 12, 2007. Tropicana has been running the AC casino for less than a year at the time of the decision.

With assets that total $2.8 billion, the Chapter 11 filing marks one of the largest bankruptcies so far this year. Its debt is slightly greater, at $3.3 billion.

What's Next
Tropicana said its casino-hotels will not be affected as the courts determine the company's fate. No layoffs are expected, or so the company wishes in any case. Tropicana will also ask the judge to continue honoring customer loyalty programs and pay vendors. A new owner, however, could be selected.

The AC casino will be sold by June 9, 2008, under a judge supervision.

What They Say
Tropicana spokesman Hud Englehart said "We ran into a perfect storm." All the obvious reasons were listed, from the credit crisis to housing bubble, and of course the Atlantic City license issue.

As for the near future, Tropicana President Scott Butera said the decision devalues his company's assets, forcing him to sell in such a slow and "inhospitable real-estate market."

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