Creditors would be able to vote on each of the plans and a confirmation hearing is scheduled for later this year.

One key component of khan's proposal is a capital contribution of $225 million in new equity-in exchange for 70% of the new equity in the reorganized debtors-in the form of a rights offering to holders of the debtors' 8.5% senior secured notes. Those holders will receive 20% of the new equity in the reorganized debtors as a backstop fee in consideration for their agreement to provide such backstop.

khan's plan is also calling for a $125- million repayment of Beal Bank's first lien loan and reinstatement of the balance of the loan on modified terms. Further, 5% of the equity in the reorganized debtors and warrants to purchase up to an additional 5% of such new equity will be issued to Trump or his affiliates. khan is also proposing a pro rata distribution of 5% of the new equity in the reorganized debtors to holders of second-lien notes and general unsecured claims The investor said in a statement that his plan offers the casino company the ability to weather the current economic turmoil with no debt. "This team now has all of the tools necessary to quickly and successfully emerge from bankruptcy and rebuild a best-in-class operation," Beal said in a statement. Trump Entertainment was unavailable for comment.

"Ultimately the purpose of Icahn's plan is to control the Atlantic City assets," says Edward A. Mermelstein, a real estate attorney and co-founder oflaw firm Edward A. Mermelstein & Associates in New York City. "Using the lender's position is one of the simplest ways to accomplish a takeover. Generally, the investor will either buy up the first note, which takes longer, or go after a mezz position that usually shortens the time frame," he relates. "But it is the bankruptcy court that will determine how all of this plays out. And at the end of the day, it comes down to who puts together the better financial package."

Mermelstein's money is on Icahn. "Trump is known for using other people's money and his name," he notes. "That's his expertise and he has built a brand. But the argument today is that there's very little added value to having his name associated with these assets. And unless Trump comes in with some hard cash, I just don't see how he's going to have a continued presence at these casino assets."

Donald and Ivanka Trump, who resigned from the company's board two days before it filed for bankruptcy back in February, tried to buy the company themselves and take it private. They were offering $114 million with Beal Bank, and were locked in a battle with bondholders for control of the company.

But Trump switched sides last month, saying the company's reorganization plan was mired in expensive litigation that made a successful outcome unlikely.

Icahn has restructured troubled gaming companies before and, according to bankruptcy attorney Edward Neigher, this track record should bode well when it comes to obtaining approval for his reorganization plan.

In 2006, Ichan sold the Sands Casino Hotel in Atlantic City to Pinnacle En-tertainment at the height of the market. The following year, he sold holdings in several Las Vegas casinos to the tune of $1.3 billion. Icahn also combined several bankrupt casinos to form American Casino & Entertainment, which was sold in 2008 for more than $1 billion and he is now working on restructuring Tropicana Entertainment and the Fontainebleau Las Vegas.

"There are very few entities with money to spend, and even fewer who want to get involved in the casino business, given how much its has suffered over the past year and will likely continue to suffer," notes Neigher, who heads the law firm Neigher LLP in New York City. "But the TER move continues Icahn's trend of buying casinos very cheap, restructuring them and then selling the assets at a premium." There is also a small possibility that Icahn will foreclose on the Atlantic City portfolio, which controlling the first-lien debt allows, but Neigher believes this is an unlikely outcome.

What Neigher does anticipate is more bankruptcy filings in the year ahead. "We are seeing a lot of companies file for bankruptcy for the sole purpose of becoming more attractive to a buyer, not necessarily to reorganize under the same ownership," he notes. "There have also been record numbers of prepackaged bankruptcies, essentially a plan for financial reorganization that a company prepares in cooperation with its creditors that will take effect once the company enters bankruptcy" The upside to this type of plan is that it can result in shorter turnaround times-the sooner the company can emerge from bankruptcy, the sooner it can implement its reorganization and return to generating revenues from its core operations.

For its part, TER had been struggling with crushing debt for several years, which became even more painful when the economy soured and competition from slot parlors in Pennsylvania and New York increased, siphoning away some of Atlantic City's customers by offering them places to gamble closer to home."Despite the current problems in Atlantic City, I continue to have great faith in the city's future," lcahn said in the statement.

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