The group has asked a judge to throw out the plan and seek an alternative.
ATLANTIC CITY, N.J. (AP) -- Denouncing Trump Hotels & amp; Casino Resorts' bankruptcy reorganization plan as "a basket of goodies" for Donald Trump, a group of common stockholders wants to file an alternative with fewer perks for the casino mogul and more value for stakeholders.
In a court filing this week, the Official Committee of Equity Security Holders asked a judge to terminate Trump Hotels' exclusive right to reorganize its affairs, saying the Chapter 11 reorganization plan now being considered reeks of inside deals benefiting Trump, his bankers and others at the expense of the approximately 32,000 holders of the casino company's common stock.
Trump and his allies are looking out for themselves, not stockholders or others with stakes in Trump Hotels, according to the shareholders.
"First, this is clearly a case in which "the fox is guarding the henhouse," the Equity Committee's filing said.
The Equity Committee does not yet have an alternative proposal crafted; it needs court permission to file such a plan.
The other side
Trump could not be reached to comment on the motion Tuesday. His office in New York referred calls to Trump Hotels President Scott Butera, who dismissed the motion as a tactic by the Equity Committee to gain leverage in the bankruptcy.
"I feel very strongly that this deal, which was entered into after a long, highly negotiated process, is the right one. The company and its board took all of our stakeholders' interests to heart when we helped facilitate this plan and we'll be able to demonstrate that," Butera said.
U.S. Bankruptcy Judge Judith Wizmur is to hear arguments on the Equity Committee's motion Feb. 23.
Trump Hotels, which operates three Atlantic City casinos and a riverboat in Gary, Ind., filed Chapter 11 on Nov. 21, citing $1.8 billion in debt.
Under the reorganization plan filed by the company, Trump would surrender majority control but would retain his titles as chairman and CEO. Bondholders would exchange their notes for equity, controlling a two-thirds interest in the post-bankruptcy Trump Hotels company.
Trump, who would have to invest about $70 million into the company, stands to benefit handsomely if the plan -- which is now set for an April 5 confirmation hearing -- is approved as is.
He would receive:
* A $2 million a year salary, plus bonuses and other fringe benefits.
* limited partnership interests that he could convert into more than 22 percent of the common stock in the reorganized company.
* The right to veto sale of any Trump casino, which can be overridden only if the company agrees to indemnify Trump for up to $100 million in personal tax liabilities stemming from such a sale.
* A three-year, right-of-first refusal to serve as contractor for any construction project of $35 million or more embarked on by Trump Hotels after it emerges from Chapter 11.
* Trump Hotels' 25 percent stake in the Miss Universe Pageant.
In addition, a "Restructuring Support Agreement" filed by Trump Hotels bans it from negotiating, helping prepare or considering alternative plans for the reorganization and gives Trump veto power in case he disagrees with any changes made to his company's plan while in bankruptcy, according to the Equity Committee's motion.
Conflicts of interest
"Conflicts of interest are not just present in this case, they are pervasive," said the motion, filed by Equity Committee lawyers Daniel K. Askin and Frank Merola. "A plan that is the product of such insider self-dealing cannot be confirmed."
The shareholders also object to Trump Hotels' use of investment bank UBS Securities -- Butera's former employer -- as the company's financial adviser and of $500 million in "exit financing" Trump intends to use once the company emerges from bankruptcy court protection.
Butera said the decision to hire UBS was the board of directors' choice after soliciting proposals from several banks. He said he expected the Equity Committee's motion and does not believe it will delay Trump Hotels' emergence from bankruptcy.