Report: Tropicana Entertainment to File for Bankruptcy

[WSJ_law_blog]

Bankruptcy Alert: The WSJ is reporting that, according to sources, Tropicana Entertainment is expected to file for bankruptcy in what would be the largest corporate bankruptcy of the year. Here’s the story.

Kentucky-based Tropicana, which has annual sales of around $1 billion and 11,000 employees, missed an interest payment Friday on a $1.32 billion loan with lender Credit Suisse. Missing the payment terminates a forebearance agreement it had with bondholders, putting pressure on the gaming company. A Tropicana spokesperson declined to comment.

According to the story, Tropicana has been stumbling since late last year, when New Jersey regulators stripped the company of its gambling license to operate a Tropicana casino in Atlantic City. The unusual license revocation came after severe cutbacks at the property made by founder William Yung III.

“Tropicana had high leverage right out of the box,” said Peggy Holloway, Moody Investor’s Service’s vice president and senior credit officer, who has Tropicana rated Caa3, its third-lowest rating. “Gaming operators overall are facing headwinds from the broader economy. And unlike some past recessions, casinos are not proving to be recession proof this time around,” she said.