1 1 STATE OF NEW JERSEY 2 CASINO CONTROL COMMISSION 3 - - - - - - - - - - - - - - - - - - - 4 5 PUBLIC MEETING NO. 09-11-12 6 7 - - - - - - - - - - - - - - - - - - - 8 9 Thursday, November 12, 2009 10 Atlantic City Commission Offices 11 Joseph P. Lordi Public Meeting Room - First Floor 12 Tennessee Avenue and Boardwalk 13 Atlantic City, New Jersey 08401 14 10:38 a.m. to 12:05 p.m. 15 16 17 Certified Court Reporter: Darlene Sillitoe 18 - - - - - - - - - - - - - - - - - - - - - - - - - - - 19 20 ATLANTIC CITY COURT REPORTING, LLC 21 CERTIFIED COURT REPORTERS AND VIDEOGRAPHERS 22 1125 ATLANTIC AVENUE, SUITE 416 23 ATLANTIC CITY, NEW JERSEY 08401 24 (609) 345-8448 www.accourtreporting.com 25 2 1 2 CASINO CONTROL COMMISSION: LINDA M. KASSEKERT, CHAIR 3 MICHAEL C. EPPS, VICE CHAIR WILLIAM T. SOMMELING, COMMISSIONER 4 SHARON ANNE HARRINGTON, COMMISSIONER 5 PRESENT FOR THE CASINO CONTROL COMMISSION: 6 DARYL W. NANCE, ADMINISTRATIVE ANALYST DANIEL J. HENEGHAN, PUBLIC INFORMATION OFFICER 7 OFFICE OF THE GENERAL COUNSEL: 8 DIANNA W. FAUNTLEROY, GENERAL COUNSEL/EXECUTIVE SECRETARY 9 LEONARD J. DiGIACOMO, ASSISTANT GENERAL COUNSEL DENIS J. CORBETT, SENIOR COUNSEL 10 ROBERT A. MONCRIEF, COUNSEL CLAIRE FRANK, PROGRAM MANAGER 11 BERNADETTE T. FRIGEN, PROGRAM SUPERVISOR SANDRA DeLIA, LEGAL SUPPORT SPECIALIST 12 DIVISION OF GAMING ENFORCEMENT: 13 JOSH LICHTBLAU, DIRECTOR 14 DEPUTY ATTORNEYS GENERAL JOHN E. ADAMS, JR., DEPUTY ATTORNEY GENERAL 15 BRIAN C. BISCIEGLIA, DEPUTY ATTORNEY GENERAL R. LANE STEBBINS, DEPUTY ATTORNEY GENERAL 16 17 18 19 20 21 22 23 24 25 3 1 A P P E A R A N C E S : 2 ITEM NO. 4 DENIS J. CORBETT, SENIOR COUNSEL R. LANE STEBBINS, DEPUTY ATTORNEY GENERAL 3 TAMA B. HUGHES, ESQ. FOR: TROPICANA CASINO AND RESORT 4 ITEM NO. 5 DENIS J. CORBETT, SENIOR COUNSEL 5 R. LANE STEBBINS, DEPUTY ATTORNEY GENERAL TAMA B. HUGHES, ESQ. 6 FOR: ADAMAR OF NEW JERSEY 7 ITEM NO. 6 DENIS J. CORBETT, SENIOR COUNSEL R. LANE STEBBINS, DEPUTY ATTORNEY GENERAL 8 TAMA B. HUGHES, ESQ. FOR: RIH ACQUISITIONS, NJ, INC. 9 ITEM NO. 11 ROBERT A. MONCRIEF, COUNSEL 10 R. LANE STEBBINS, DEPUTY ATTORNEY GENERAL KAREN M. WOSNACK, ESQ. 11 FOR: RESORTS INTERNATIONAL HOTEL, INC. 12 ITEM NO. 13 LEONARD J. DiGIACOMO, ASSISTANT 13 GENERAL COUNSEL JOHN E. ADAMS, JR., DEPUTY 14 ATTORNEY GENERAL DUANE MORRIS, LLP 15 GILBERT BROOKS, ESQ. ERIC FRANK, ESQ. 16 CHRISTOPHER SORIANO, ESQ. FOR: STEERING COMMITTEE OF SECURED LENDERS 17 PASHMAN STEIN SEAN MACK, ESQ. 18 FOR: TRUSTEE/CONSERVATOR 19 20 21 22 23 24 25 4 1 AGENDA PUBLIC MEETING NO. 09-11-12 2 NOVEMBER 12, 2009, 10:38 a.m. ITEM PAGE VOTE 3 1 Ratification of the minutes of the 8 9 October 28, 2009, public meeting 4 2 Applications for employee and casino service industry licenses 5 6 initial and/or renewal of casino key 9 9 and casino employee licenses 6 3 initial and/or renewal of casino key 10 10 and casino employee licenses 7 Application of Jane M. Hart for a casino 10 11 Key employee license and for qualification 8 as Vice President of Casino Marketing for Bally's Park Place, Inc., Boardwalk Regency 9 Corporation, Harrah's Atlantic City Operating Company, LLC, and Showboat 10 Atlantic City Operating Company, LLC 3 Stipulations of settlement and consent agreements: 11 a) Michael Goldstein (09-0357-ER) 11 13 b) Mohammed Rahman (07-0326-RC) 11 13 12 c) Dario Vasquez (a/k/a Vazquez) 11 13 (08-0175-RC) 13 d) Stephanie L. Blount (08-0988-RC, 11 13 09-0568-EA) 14 e) Safeeullah Muhammad (a/k/a Anthony adj. Scott Johnson, Scott Anthony Johnson, 11 13 15 Harry Woodall, Derrick Johnson and Scott Washington) (07-0478-EA) 16 f) Michael C. Betanzo (08-0302-ER) 11 13 g) Monna J. Egnor (09-0152-ER) 11 13 17 h) Muhammad A. Kaddus (09-0477-ER) 11 13 i) Tam K. Lan (09-0155-ER) 11 18 j) Lori K. Sawchuk (09-0479-ER) 11 13 k) Benjamas Schuman (09-0171-ER) 11 13 19 l) Kelly L. Pippet (09-0113-ER) 11 13 m) Henry T. Huynh (09-0402-RC) 11 13 20 n) Lan A. Tran (09-0037-RC) 11 13 o) Renee L. Mason (08-0307-ER) 11 13 21 p) Pharoah D. Simmons (09-0172-ER) 11 13 4 Stipulation of settlement in State v. 13 16 22 Adamar of New Jersey (D/b/a Tropicana Casino and Resort) (08-0884-VC, 09-0228-VC) 23 5 Stipulation of settlement in State v. 16 18 Adamar of New Jersey (d/b/a Tropicana Casino 24 and Resort) (09-0325-VC) 25 5 1 AGENDA PUBLIC MEETING NO. 09-11-12 2 NOVEMBER 12, 2009, 10:38 a.m. ITEM PAGE VOTE 3 6 Stipulation of settlement in State v. 18 21 RIH Acquisitions NJ, LLC (d/b/a Atlantic 4 City Hilton Casino Resort, Anthony Ashman and Roseanne Moffa) (09-0241-VC) 5 7 Petition of James Surles for early 22 29 Reapplication (09-0241-VC) 6 8 Application for suspension in State v. 30 32 Makal L. Kitchen (09-0647-RC) 7 9 Petition of Harrah's Entertainment, Inc., adj. Harrah's Operating Company, Inc., Harrah's 8 Atlantic City Operating Company, LLC, Showboat Atlantic City Operating Company, 9 LLC, Bally's Park Place, Inc., and Boardwalk Regency Corporation requesting permission 10 for Marilyn Winn to perform the duties and exercise the powers of a member of the 11 Capital Committee of the Board of Directors of Harrah's Entertainment, Inc., prior to 12 qualification (PRN 3090901) 10 Proposed readoption of NJAC 19:54 (taxes) 32 33 13 11 Petition of Resorts International Hotel, Inc. (d/b/a Resorts Atlantic City) for an 14 amendment to its Certificate of Operation (PRN 2940902) 15 12 Proposed adoption of amendments to NJAC 35 37 19:40-1.2, 19:45-1.54 and 1.55, 19:47-15.4 16 and 15.6 and new rule 19:45-3.1 (expiration of certain gaming debts and payment of a 17 portion of the proceeds to the Casino Revenue Fund) 18 13 Amended and supplemented petition of the 37 Steering Committee of Secured Lenders 19 for approval of an Amended and restated Purchase Agreement and for other relief 20 (PRN 2950901) Jordan Bleznick, sworn 48 21 Kyle Pasewark, sworn 73 22 23 24 25 6 1 E X H I B I T S : 2 NO. DESCRIPTION EVD 3 ITEM NO. 2 4 P-1 Remand for hearings 6 license X 5 P-2 Grant 3 licenses X 6 7 ITEM NO. 13 8 D-1 DGE's Letter Report 9 P-1 Amended and Restated Purchase Agreement X (sealing request) 10 P-2 Indemnification Agreement X P-3 Side Letter X 11 P-4 OpCo Debtor's Restructuring Transactions X P-5 Letter from Credit Suisse X 12 Re: Required Lenders' Direction to Enter Into Amended and Restated Purchase Agreement 13 P-6 Third Notice of Amendment to Plan X Supplement in Support of Debtor's First 14 Amended Joint Plan of Reorganization of Tropicana Entertainment, LLC 15 P-7 First Amended Joint Plan of Reorganized X of Tropicana Entertainment, LLC 16 P-8 Order of Hon. Kevin J. Carey, Chief US X Bankruptcy Judge, US Bankruptcy Court for 17 the District of Delaware, 11-4-09 P-9 Order of Hon. Judith H. Wizmur, Chief X 18 Judge, US Bankruptcy Court, District of NJ 11-4-09 19 P-10 Certification of Scott Butera with: X A Disposition, 10-15-09 20 B Casino Transaction Agreement C Bill of Sale 21 D Assignment of Lease (Casino) E Assignment of Service Contract, Equipment 22 Leases, and Permits F Assignment of Reciprocal Use Agreement 23 G New Casino Operator Affirmation Joinder H Surrender of Gaming License 24 25 (Exhibits retained by Commission.) 7 1 (Public Meeting 09-11-12 was commenced 2 at 10:38 a.m.) 3 MR. NANCE: Good morning. I'd like to 4 read an opening statement: 5 This is to advise the general public 6 that in compliance with Chapter 231 of the 7 public laws of 1975 entitled the "Open Public 8 Meetings Act," the New Jersey Casino Control 9 Commission on October 7, 2008, filed with the 10 Secretary of State at the State House in 11 Trenton, New Jersey, a notice of this hearing. 12 On October 7, copies were mailed to 13 subscribers. 14 Members of the press will be permitted 15 to take photographs, and we ask that this be 16 done in a manner which is not disruptive or 17 distracting to the Commission. 18 The use of cell phones in the public 19 meeting room while the Commission is in session 20 is prohibited. 21 Any member of the public who wish to 22 address the Commission will be given the 23 opportunity to do so before the Commission 24 adjourns for the day. 25 Would everyone please stand for the 8 ITEM NO. 1 1 Pledge of Allegiance. 2 (The flag salute was recited.) 3 (There is a microphone issue.) 4 VICE CHAIR EPPS: Can you hear me now? 5 (Laughter.) 6 (Conferring.) 7 CHAIR KASSEKERT: Now it's on. 8 MR. NANCE: We're live. 9 CHAIR KASSEKERT: All right. Good 10 morning. 11 MR. NANCE: Good morning. 12 FROM THE FLOOR: Good morning. 13 MR. NANCE: The matters discussed in 14 closed session were: Employee and enterprise 15 license matters. 16 The Commission approved the October 28, 17 2009, closed session minutes. 18 COMMISSIONER SOMMELING: Move to 19 approve. 20 MR. NANCE: Item No. 1, ratification of 21 the minutes of the October 28, 2009, public 22 meeting. 23 COMMISSIONER SOMMELING: Move to 24 approve. 25 VICE CHAIR EPPS: Second. 9 ITEM NO. 2 1 CHAIR KASSEKERT: The motion has been 2 made and seconded. All in favor? 3 (Ayes.) 4 CHAIR KASSEKERT: Opposed? 5 (No response.) 6 CHAIR KASSEKERT: Motion carries. 7 MR. NANCE: Item No. 2, application for 8 employee and casino service industry licenses. 9 This agenda item will be entered as Exhibit 10 Lists 1 and 2. 11 Exhibit List 1 consists of six 12 applications for initial and/or renewal of 13 casino key and casino employee licenses. 14 The Division has objected to licensure. 15 VICE CHAIR EPPS: I move that we remand 16 these matters for hearings. 17 COMMISSIONER HARRINGTON: Second. 18 CHAIR KASSEKERT: The motion has been 19 made and seconded. All in favor? 20 (Ayes.) 21 CHAIR KASSEKERT: Opposed? 22 (No response.) 23 CHAIR KASSEKERT: Motion carries. 24 MR. NANCE: Exhibit -- list -- excuse 25 me. 10 ITEM NO. 2 1 This agenda item will be entered as 2 Exhibit List 2. Exhibit List 2 consists of 3 three applications for initial and/or renewal 4 of casino key and casino employee licenses. 5 Staff and the Division have recommended 6 that these licenses be granted. 7 VICE CHAIR EPPS: I move that we grant 8 these licenses. 9 COMMISSIONER SOMMELING: Second. 10 CHAIR KASSEKERT: The motion has been 11 made and seconded. All in favor? 12 (Ayes.) 13 CHAIR KASSEKERT: Opposed? 14 (No response.) 15 CHAIR KASSEKERT: Motion carries. 16 MR. NANCE: For consideration is the 17 application of Jane M. Hart for a casino key 18 employee license and for qualification as Vice 19 President of Casino Marketing for Bally's Park 20 Place, Inc., Boardwalk Regency Corporation, 21 Harrah's Atlantic City Operating Company, LLC, 22 and Showboat Atlantic City Operating Company, 23 LLC. 24 The Division did not take a position 25 with respect to licensure. 11 ITEM NO. 3 1 VICE CHAIR EPPS: I move that we remand 2 this matter for hearing. 3 COMMISSIONER SOMMELING: Second. 4 CHAIR KASSEKERT: Motion has been made 5 and seconded. This is a roll call vote. 6 MR. NANCE: Commissioner Harrington? 7 COMMISSIONER HARRINGTON: Yes. 8 MR. NANCE: Commissioner Sommeling? 9 COMMISSIONER SOMMELING: Yes. 10 MR. NANCE: Vice Chair Epps? 11 VICE CHAIR EPPS: Yes. 12 MR. NANCE: Chair Kassekert? 13 CHAIR KASSEKERT: Yes. 14 MR. NANCE: The record will reflect that 15 the motion is unanimous. 16 Item No. 3, stipulation of settlement 17 and consent agreements. When I call your name, 18 please come forward, standing behind this 19 middle table, spreading across the room so that 20 you may be seen: Michael Goldstein, Mohammed 21 Rahman, Dario Vasquez, Stephanie Blount. 22 Safeeullah Muhammad has been adjourned. 23 Michael C. Betanzo, Monna Egnor, Muhammad 24 Kaddus, Tam Lan, Lori Sawchuk, Benjamas 25 Schuman, Kelly Pippet, Henry Huynh, Lan Tran, 12 ITEM NO. 3 1 Renee Mason, and Pharoah Simmons. 2 CHAIR KASSEKERT: Has everyone whose 3 name been called come forward? 4 I'm going to ask that you each state 5 your name for the record, starting with you, 6 sir? 7 MR. SIMMONS: Pharoah Simmons. 8 MR. GOLDSTEIN: Mike Goldstein. 9 MR. HUYNH: Henry Huynh. 10 CHAIR KASSEKERT: Okay. In a moment we 11 are going to vote on the stipulations which 12 you've agreed to with the Division Division of 13 Gaming Enforcement. I'm going to ask at this 14 point if any of you wish to be heard on your 15 matter. You do not have to say anything if you 16 don't want to. 17 Does anyone wish to be heard? 18 (No response.) 19 CHAIR KASSEKERT: No? Okay. 20 Mr. Biscieglia? 21 MR. BISCIEGLIA: Good morning, Chair and 22 Commissioners. 23 The Division has nothing further and 24 ask that the stipulations of settlement be 25 approved as submitted. 13 ITEM NO. 4 1 Thank you. 2 CHAIR KASSEKERT: Thank you. 3 Any questions? 4 COMMISSIONER SOMMELING: Madame Chair, 5 move to approve the stipulations. 6 VICE CHAIR EPPS: Second. 7 CHAIR KASSEKERT: The motion has been 8 made and seconded. All in favor? 9 (Ayes.) 10 CHAIR KASSEKERT: Opposed? 11 (No response.) 12 CHAIR KASSEKERT: Motion carries. 13 Thank you for coming. Good luck. 14 MR. SIMMONS: Thank you. 15 MR. HUYNH: Thank you. 16 MR. GOLDSTEIN: Thank you. 17 MR. NANCE: Item No. 4, stipulation of 18 settlement in State versus Adamar of New 19 Jersey. 20 Mr. Corbett? 21 MR. CORBETT: Chair, Commissioners, in 22 the stipulation of settlement in this case, the 23 casino licensee admits to the regulatory 24 violation regarding patrons touching cards in 25 blackjack and agrees to a penalty of $28,000. 14 ITEM NO. 4 1 Miss Hughes is here for the casino 2 licensee and Mr. Stebbins for the Division. 3 CHAIR KASSEKERT: Thank you. 4 Good morning, Miss Hughes. 5 MS. HUGHES: Good morning. Tama Hughes 6 on behalf of Tropicana Casino and Resort. Good 7 morning, everyone. 8 Before you is the stipulation for 9 08-0884, the marked cards. I just want to say 10 for the record that as a result of what 11 occurred back -- there were two instances of 12 marked cards at Tropicana, tremendous training 13 went across the board to all the dealers and 14 all the pit bosses on not just marked cards, 15 identification of counterfeits, just it was an 16 intensive training that occurred for 17 Tropicana's employees to prevent such a thing 18 from happening again. 19 And, also, everything -- all of our 20 internal controls were once again provided to 21 our employees so that the notices that are 22 required to go out, you know, if such an 23 incident occurs again, doesn't occur as it did 24 in these particular matters where there was 25 improper notification that went up the chain of 15 ITEM NO. 4 1 command. 2 So with that, I would ask that you 3 approve this settlement. 4 CHAIR KASSEKERT: Thank you, Miss 5 Hughes. 6 Anything questions? 7 COMMISSIONER SOMMELING: No questions, 8 Madame Chair. 9 CHAIR KASSEKERT: Mr. Stebbins? 10 MR. STEBBINS: Good morning, Madame 11 Chair, and members of the Commission. 12 Miss Hughes laid out the circumstances. 13 There are two separate complaints rolled into a 14 single stipulation. It's good to hear that the 15 Tropicana has undertaken such vigorous efforts 16 to get back in compliance with this. 17 I think the facts are clear. I think 18 the stipulation is fair. I would urge you to 19 adopt it. 20 CHAIR KASSEKERT: Thank you. 21 Any questions for the Division? 22 COMMISSIONER SOMMELING: I have no 23 questions Madame Chair. 24 VICE CHAIR EPPS: Madame Chair, I move 25 that we approve the stipulation of settlement 16 ITEM NO. 5 1 and impose a cival penalty of $28,000 against 2 Adamar of New Jersey, Incorporated, for 3 violation of Commission regulations regarding 4 rules of the game. 5 COMMISSIONER HARRINGTON: Second. 6 CHAIR KASSEKERT: The motion has been 7 made and seconded. All in favor? 8 (Ayes.) 9 CHAIR KASSEKERT: Opposed? 10 (No response.) 11 CHAIR KASSEKERT: Motion carries. 12 MR. NANCE: Item No. 5, stipulation of 13 settlement in State versus Adamar of New 14 Jersey, Inc. 15 MR. CORBETT: Chair, Commissioners, in 16 the stipulation in this case, the casino 17 licensee admits to regulatory violation 18 regarding underage gambling and agrees to a 19 penalty of $15,000. 20 Again, Miss Hughes is here for the 21 casino licensee and Mr. Stebbins for the 22 Division. 23 CHAIR KASSEKERT: Thank you. 24 Miss Hughes? 25 MS. HUGHES: Good morning once again. 17 ITEM NO. 5 1 With regards to this matter, I just -- 2 this is not in any way -- I'm trying to 3 mitigate the circumstances here. Tropicana 4 takes its responsible gaming program and its 5 responsibilities under it very seriously. 6 Just want to let everyone know that 7 Tropicana in the past two years alone has 8 arrested or ejected over 190 underaged 9 individuals. Our security department and our 10 surveillance department routinely scan the 11 casino floor looking for underaged individuals. 12 Our casino floor staff is tremendous because 13 they, too, are people that spot underaged 14 individuals and, you know, call it all the way 15 up the chain of command. 16 I would ask that you accept this 17 stipulation of settlement. And, once again, 18 Tropicana does take its responsibilities very 19 seriously in this regard. 20 CHAIR KASSEKERT: Thank you. 21 Any questions for Miss Hughes? 22 COMMISSIONER SOMMELING: No questions, 23 Madame Chair. 24 CHAIR KASSEKERT: Mr. Stebbins? 25 MR. STEBBINS: Thank you. 18 ITEM NO. 6 1 Miss Hughes said it much better than I 2 could. I would urge you to adopt the 3 stipulation. 4 CHAIR KASSEKERT: Thank you. 5 Any questions? 6 COMMISSIONER SOMMELING: No questions, 7 Madame Chair. 8 COMMISSIONER HARRINGTON: I move that we 9 approve the stipulation of settlement and 10 impose a civil penalty of $15,000 against 11 Adamar of New Jersey, Inc., for violation of 12 Commission regulation regarding underaged 13 gambling. 14 COMMISSIONER SOMMELING: Second. 15 CHAIR KASSEKERT: The motion has been 16 made and seconded. All in favor? 17 (Ayes.) 18 CHAIR KASSEKERT: Opposed? 19 (No response.) 20 CHAIR KASSEKERT: The motion carries. 21 Thank you. 22 MS. HUGHES: Thank you. 23 MR. NANCE: Item No. 6, stipulation of 24 settlement in State versus RIH Acquisition, New 25 Jersey, LLC. 19 ITEM NO. 6 1 Mr. Corbett? 2 MR. CORBETT: Chair, Commissioners, in 3 the stipulations of settlement in this case, 4 the Respondents admit the regulatory violation 5 regarding computer access. 6 The Respondent casino licensee agrees to 7 a penalty of $20,000. 8 MR. NANCE: You may be be seated. 9 MR. CORBETT: Respondent Ashman agrees 10 to a penalty of $5,000. And Respondent Moffa 11 agrees to a three-day suspension of her casino 12 employee license and a letter of reprimand. 13 Karen Wosnack is here for the casino 14 licensee and Mr. Ashman is here and as well as 15 Miss Moffa. 16 CHAIR KASSEKERT: Thank you. 17 Miss Wosnack? 18 MS. WOZNIAK: Good morning. 19 Just to be clear, I am here only on 20 behalf of RIH Acquisitions and the licensee. 21 And I'd be happy to answer any questions on the 22 stipulations, but I just ask you to approve it 23 as far as the licensee. 24 Thank you. 25 CHAIR KASSEKERT: Thank you. 20 ITEM NO. 6 1 Any questions for Miss Wozniak? 2 COMMISSIONER SOMMELING: No questions, 3 Madame Chair. 4 CHAIR KASSEKERT: Mr. Ashman, Miss 5 Moffa, you understand the stipulation of 6 settlement that you've agreed to with the 7 Division of Gaming Enforcement? 8 Is there anything you'd like to say in 9 this matter. 10 MR. ASHMAN: No, Madame Chair. 11 MS. MOFFA: No. 12 CHAIR KASSEKERT: Okay. Very good. 13 Mr. Stebbins? 14 MR. STEBBINS: Thank you, Madame Chair, 15 members of the Commission. 16 We have another matter -- third one 17 today. This involves the access to the 18 computer. It involves complimentaries that are 19 accrued to a patron. And the actions or 20 missteps, if you will, by the various 21 individuals are laid out in the complaint. 22 I think the stipulation adequately 23 addresses all of the concerns, and I would urge 24 you to adopt all three of these stipulations. 25 CHAIR KASSEKERT: Thank you. 21 ITEM NO. 6 1 Any questions? 2 COMMISSIONER SOMMELING: No questions, 3 Madame Chair. 4 VICE CHAIR EPPS: Madame Chair, I move 5 that we approve the stipulation of settlement 6 and asses the following penalties for violation 7 of Commission regulations regarding internal 8 controls: A, impose a civil penalty of $20,000 9 against RIH Acquisitions, New Jersey, LLC; B, 10 impose a civil penalty of $5,000 against 11 Anthony Ashman; and, C, suspend Roseanne 12 Moffa's casino employee license for three 13 working days and issue a letter of reprimand to 14 be made a permanent part of her employee file. 15 COMMISSIONER SOMMELING: Second. 16 COMMISSIONER HARRINGTON: Second. 17 CHAIR KASSEKERT: The motion has been 18 made and seconded. All in favor? 19 (Ayes.) 20 CHAIR KASSEKERT: Opposed? 21 (No response.) 22 CHAIR KASSEKERT: Motion carries. 23 Thank you. 24 MS. WOZNIAK: Thank you very much. 25 MR. ASHMAN: Thank you. 22 ITEM NO. 7 1 MR. STEBBINS: Thank you. 2 MR. NANCE: Item No. 7, petition of 3 James Surles for early reapplication. 4 Miss Frigen? 5 MS. FRIGEN: Good morning, Madame Chair, 6 Commissioners. 7 Mr. Surles has advised me he would not 8 be here this morning. Let me just confirm for 9 the record, though, that he is not present? 10 (No response.) 11 MS. FRIGEN: Okay. He is not here. He 12 has filed a petition seeking permission to make 13 early application for a license or 14 hotel-related employment. 15 The Division has interposed an objection 16 to the petition. 17 Mid-afternoon Tuesday we received a 18 letter from Mr. Surles in which he is seeking 19 an adjournment of the petition, action on the 20 petition, indicating that he wanted to clear up 21 some matters. And in subsequent telephone 22 conversation he indicated that either an 23 adjournment or a withdrawal of the petition 24 itself. I communicated that to the Division. 25 I provided them with a copy of the letter, and 23 ITEM NO. 7 1 I understand that the Division is objecting to 2 either the adjournment request or the 3 withdrawal of the petition. 4 So the Commission has three options. It 5 can grant this request for adjournment. It 6 could agree to withdraw the petition, or to 7 take action today. Whatever is your pleasure. 8 CHAIR KASSEKERT: Thank you. 9 MS. FRIGEN: I defer over to the 10 Division. 11 CHAIR KASSEKERT: Mr. Biscieglia? 12 MR. BIACIEGLIA: Thank you, Chair. 13 The reason for the Division' objection 14 is that another matter has surfaced that I 15 believe makes it relevant to hear the matter 16 now. 17 In Mr. Surles' letter of Tuesday of this 18 week, he seems to set forth as the reasoning 19 for his request for an adjournment -- the whole 20 letter centers around his Motor Vehicle 21 Commission fines, which were an issue that the 22 Division originally objected to prior to Mr. 23 Surles abandoning the process and the 24 Commission finding him disqualified. However, 25 subsequent to those events, September 20th, 24 ITEM NO. 7 1 2007, Mr. Surles was charged by the Atlantic 2 City Police with theft of movable property and 3 conspiracy to commit theft of movable property. 4 It appears that these charges were 5 fourth-degree charges and not disqualifying 6 based upon the penalties that were assessed 7 against Mr. Surles. However, he failed to 8 disclose this charge in his application -- in 9 his petition that is before the Commission 10 today. He claims he had no new arrests in this 11 new petition. 12 This, of course, raises a disqualifying 13 matter under 86b of the Act. So while Mr. 14 Surles' request for an adjournment centers 15 around the Motor Vehicle Commission fines, in 16 the Division's eye, that's not really the main 17 issue that we have regarding this petition. I 18 don't think that this is a matter that's going 19 to change in a year or in whatever time period 20 that Mr. Surles would seek to reapply -- to 21 serve another petition upon the Commission. 22 So it's the Division's position that 23 this matter should be heard today. 24 CHAIR KASSEKERT: Thank you. 25 MR. BISCIEGLIA: And we'll accept 25 ITEM NO. 7 1 whatever the Commission decides to do in this 2 matter. 3 Thank you. 4 CHAIR KASSEKERT: Thank you. 5 Let me ask if there are any questions 6 from the Commissioners? 7 COMMISSIONER SOMMELING: No questions, 8 Madame Chair. 9 COMMISSIONER HARRINGTON: When was -- 10 CHAIR KASSEKERT: Commissioner 11 Harrington? 12 COMMISSIONER HARRINGTON: When was that? 13 September 20th of this year? 14 MR. BISCIEGLIA: Of 2007. 15 COMMISSIONER HARRINGTON: 2007. 16 CHAIR KASSEKERT: I guess my only 17 question to you, Mr. Biscieglia, is an 18 adjournment is another one thing, obviously. 19 If he's not here to defend himself, I don't 20 know if that's proper, but having -- allowing 21 him to withdraw the petition doesn't put him in 22 any better place than he is now. And I 23 understand your argument that, you know, a year 24 from now if we agree to deny this petition, you 25 know, he can't apply again for a year. And you 26 ITEM NO. 7 1 don't think he'd be ready at that point, 2 anyway. But I'm just, you know, a little 3 uncomfortable with -- almost seems like a 4 double penalty. I understand that he didn't 5 provide the information. I understand that, 6 you know, there's obviously Motor Vehicle fines 7 here which he may or may not be able to pay 8 back. But I'm just -- I'm a little uneasy 9 because I almost feel we're -- you know, he'd 10 be in no better place if we allow him to 11 withdraw. It still would be the same 12 circumstances. And, plus, he would be not 13 allowed to apply again for a year. 14 Any response to that? 15 MR. BISCIEGLIA: Certainly. I 16 understand your point. And I see the veracity 17 of it. Obviously, it was just brought to the 18 Division's attention this morning. 19 CHAIR KASSEKERT: Yeah. 20 MR. BISCIEGLIA: Prior to the meeting 21 that this was an adjournment/withdrawal 22 request. 23 CHAIR KASSEKERT: Right. 24 MR. BISCIEGLIA: It was originally 25 presented as a withdrawal request. 27 ITEM NO. 7 1 However, the one area that I would talk 2 about there is that Mr. Surles chose to 3 petition for his early reapplication. In the 4 process of doing so, the Division and the 5 Commission both go on through a process of 6 answering the petition, and, you know, devote 7 work time and a resources to answering the 8 petition. The petition has, in the process of 9 that, a disqualifying matter has been brought 10 to our attention. 11 CHAIR KASSEKERT: Uh-huh. 12 MR. BISCIEGLIA: So for those reasons, I 13 think it would be appropriate to be heard 14 today, even though I can understand your point 15 of really a what is the future harm? But 16 because he chose to serve the petition, and we 17 chose to answer, and we've answered it as 18 required, it's just the Division's feeling that 19 the matter can be heard today. 20 CHAIR KASSEKERT: Commissioner -- 21 MR. BISCIEGLIA: That there's really no 22 relevant cause. 23 CHAIR KASSEKERT: Uh-hum. 24 MR. BISCIEGLIA: -- for an adjournment. 25 CHAIR KASSEKERT: Uh-hum. 28 ITEM NO. 7 1 Miss Frigen? 2 MS. FRIGEN: Madame Chair, I would just 3 request a withdraw, one of those options, which 4 is to today to permit Mr. Surles to withdraw. 5 I was just speaking with General Counsel. 6 Since he communicated that option in a 7 telephone conversation as opposed to putting it 8 in writing, she would feel more comfortable 9 that we either have him submit a letter or he 10 would have to come to a meeting and express 11 that to a Commission directly that was his 12 intention unless the Commission decides to act 13 and grant the Division's request to act on the 14 petition today. 15 And I did let Mr. Surles, as well, know 16 that there was a possible outcome today. 17 CHAIR KASSEKERT: And certainly he is 18 not here to make his argument. 19 MS. FRIGEN: Correct. 20 CHAIR KASSEKERT: Let me if if there are 21 any additional questions or if there's a 22 motion? 23 MR. BISCIEGLIA: If I may just -- 24 CHAIR KASSEKERT: Sure. I'm sorry, Mr. 25 Biscieglia. 29 ITEM NO. 7 1 MR. BISCIEGLIA: I would just say that 2 Mr. Surles has had ample notice of today's 3 affairs. 4 CHAIR KASSEKERT: Uh-hum. 5 MR. BISCIEGLIA: It was his petition. 6 CHAIR KASSEKERT: Uh-hum. 7 MR. BISCIEGLIA: So his choosing not to 8 present himself today, that's a choice that was 9 100 percent within his realm of decision. 10 CHAIR KASSEKERT: Absolutely. 11 MR. BISCIEGLIA: Thank you. 12 COMMISSIONER HARRINGTON: I'd make a 13 motion that we adjourn this matter for today. 14 CHAIR KASSEKERT: Is there a second for 15 that? 16 COMMSSIONER SOMMELING: Adjourn? 17 Adjourn? 18 CHAIR KASSEKERT: Adjourn. That's 19 Commissioner Harrington's motion. 20 COMMISSIONER SOMMELING: Second. 21 CHAIR KASSEKERT: The motion has been 22 made and seconded. All in favor? 23 (Ayes.) 24 CHAIR KASSEKERT: Opposed? 25 VICE CHAIR EPPS: No. 30 ITEM NO. 8 1 CHAIR KASSEKERT: Motion carries three 2 to one. 3 Thank you. 4 MR. BISCIEGLIA: So the motion was to 5 adjourn? 6 CHAIR KASSEKERT: Adjourn. 7 MR. BISCIEGLIA: And not withdraw? 8 CHAIR KASSEKERT: Yeah. There was no 9 motion to withdraw because he did not put that 10 in writing. He communicated that in telephone 11 conversation with Miss Frigen. So I think 12 probably what -- if he wants to withdraw the 13 matter, we should get that in writing. 14 We'll adjourn it for one meeting. If 15 the same circumstances prevail, then we'll act 16 upon it. 17 MS. FRIGEN: Okay. Thank you. 18 MR. BISCIEGLIA: Okay. Thank you. 19 CHAIR KASSEKERT: Thank you. 20 MR. NANCE: Item No. 8, application for 21 suspension in State versus Makal Kitchen. 22 Miss DeLia? 23 MS. DeLIA: Good morning. 24 CHAIR KASSEKERT: Good morning. 25 MS. DeLIA: I just want to ask if Mr. 31 ITEM NO. 8 1 Kitchen is here or represented? 2 (No response.) 3 MS. DeLIA: Apparently not. 4 Mr. Biscieglia is here today on behalf 5 of the Division. 6 CHAIR KASSEKERT: Thank you. 7 Mr. Biscieglia? 8 MR. BISCIEGLIA: Thank you. 9 The Commission has the Division's 10 complaint of October 28th, 2009, in which is 11 set forth our allocation of the 12 disqualification that Mr. Kitchen, while 13 employed as a security officer at the Showboat 14 Atlantic City, received a lost wallet from an 15 EVS attendant that contained approximately 16 $1,393. The Respondent then took that money 17 and kept it for himself before turning the 18 wallet over. Upon apprehension, the Respondent 19 admitted taking the money, and the money was 20 recovered. 21 I would just like to add that this 22 matter is currently pending a grand jury with 23 no date set. 24 CHAIR KASSEKERT: Thank you. 25 Any questions? 32 ITEM NO. 8-10 1 COMMISSIONER SOMMELING: Madame Chair, I 2 move to grant the Division's application to 3 suspend Mr. Kitchen's casino employee license. 4 VICE CHAIR EPPS: Second. 5 CHAIR KASSEKERT: The motion has been 6 made and seconded. All in favor? 7 (Ayes.) 8 CHAIR KASSEKERT: Opposed? 9 (No response.) 10 CHAIR KASSEKERT: Motion carries. 11 Thank you. 12 MR. BISCIEGLIA: Thank you. 13 MR. NANCE: Item No. 9 has been 14 adjourned. 15 Item No. 10, proposed readoption of NJAC 16 19:54. 17 Miss Frank? 18 MS. FRANK: Good morning, Chair and 19 Commissioners. 20 The rules in Chapter 54 ensure the 21 efficient and reliable computation, collection, 22 verification, and enforcement of the eight 23 percent tax on first revenue of operating 24 casinos. 25 If you act today to approve the proposed 33 ITEM NO. 11 1 readoption, it should appear in the New Jersey 2 Register of December 21st of this year. 3 CHAIR KASSEKERT: Thank you. 4 Any questions? 5 COMMISSIONER SOMMELING: No questions, 6 Madame Chair. 7 VICE CHAIR EPPS: I'll move to approve 8 the proposed readoption for publication without 9 amendment. 10 CHAIR KASSEKERT: Is there a second? 11 COMMISSIONER HARRINGTON: Second. 12 CHAIR KASSEKERT: The motion has been 13 made and seconded. All in favor? 14 (Ayes.) 15 CHAIR KASSEKERT: Opposed? 16 (No response.) 17 CHAIR KASSEKERT: Motion carries. 18 MS. DeLIA: Thank you. 19 CHAIR KASSEKERT: Thank you. 20 MR. NANCE: Item No. 11, petition of 21 Resorts International Hotel, Inc., for an 22 amendment to its Certificate of Operation. 23 MR. MONCRIEF: Good morning, Madame 24 Chair and members of the Commission. 25 Before you is the petition of Resorts to 34 ITEM NO. 11 1 amend its Certificate of Operation. A draft 2 resolution has been circulated to the parties, 3 and I believe there's no objection. 4 For the Petitioner is Karen Wosnack and 5 the Division Mr. Stebbins. 6 CHAIR KASSEKERT: Miss Wosnack? 7 MS. WOSNACK: Good morning. Karen 8 Wosnack again. 9 In the event you have a question about 10 this petition, I do have Mary Cramer, Vice 11 President of Design Construction with me in the 12 event I can't handle of your any technical 13 questions. But if you have anything else I 14 might be able to answer, I'd be happy to try. 15 CHAIR KASSEKERT: Thank you. 16 Let me ask if there are any questions of 17 Miss Wosnack. 18 COMMISSIONER SOMMELING: I have no 19 questions. 20 CHAIR KASSEKERT: No? 21 Mr. Stebbins? 22 MR. STEBBINS: Thank you. 23 We have reviewed the draft resolution. 24 We took a look at this when the petition came 25 in, and we have no objection. 35 ITEM NO. 12 1 CHAIR KASSEKERT: Thank you. 2 Any questions for Mr. Stebbins? 3 COMMISSIONER SOMMELING: No questions, 4 Madame Chair. 5 VICE CHAIR EPPS: Madame Chair, I move 6 we adopt the draft res -- adopt the draft 7 resolution and approve the petition of Resorts 8 International Hotel, Inc., for an amendment to 9 its Certificate of Operations and CHAB license 10 to permit the reconfiguration to its gaming 11 floor subject to the conditions in the 12 resolution. 13 COMMISSIONER SOMMELING: Second. 14 COMMISSIONER HARRINGTON: Second. 15 CHAIR KASSEKERT: The motion has been 16 made and seconded. All in favor? 17 (Ayes.) 18 CHAIR KASSEKERT: Opposed? 19 (No response.) 20 CHAIR KASSEKERT: Motion carries. 21 Thank you. 22 MS. WOZNIAK: Thank you very much. 23 MR. STEBBINS: Thank you. 24 MR. NANCE: Item No. 12, proposed 25 adoption of amendments concerning expiration of 36 ITEM NO. 12 1 certain gaming debts and payment of a portion 2 of the proceeds to the casino revenue found. 3 Mr. Moncrief? 4 MR. MONCRIEF: Madame Chair and members 5 of the Commission, before you is the proposed 6 adoption of amendments to codify regulations 7 that represent legislative amendments that were 8 made last April. These regulations were 9 temporarily adopted on April 15th of this year. 10 They were published -- a proposal was published 11 July 12th of this year. 12 The only comment received was from the 13 Division of Gaming Enforcement which 14 recommended to adopt the proposed regulations. 15 The only changes from the original 16 proposal are minor technical changes which 17 would not require a republication, so I leave 18 the matter for your consideration. 19 CHAIR KASSEKERT: Thank you. 20 Any questions? 21 VICE CHAIR EPPS: No questions. 22 Madame Chair, I move that we adopt as 23 published with minor technical changes not 24 requiring additional public notice or comment. 25 COMMISSIONER SOMMELING: Second. 37 ITEM NO. 13 1 CHAIR KASSEKERT: The motion has been 2 made and seconded. All in favor? 3 (Ayes.) 4 CHAIR KASSEKERT: Opposed? 5 (No response.) 6 CHAIR KASSEKERT: Motion carries. 7 Thank you. 8 MR. MONCRIEF: Thank you. 9 MR. NANCE: Item No. 13, amendment and 10 supplemented petition of the Steering Committee 11 of Secured Lenders for approval of an amendment 12 and restated purchase agreement and for other 13 relief. 14 CHAIR KASSEKERT: Good morning, Mr. 15 DiGiacomo. 16 MR. DiGIACOMO: Good morning, Madame 17 Chair and Commissioners. 18 If counsel would enter their appearances 19 for the record. 20 MR. BROOKS: Good morning, Madame Chair. 21 Gil Brooks from the firm Duane Morris appearing 22 on behalf of the Petitioner. I have with me 23 Christopher Soriano, also from the firm of 24 Duane Morris, and Eric Frank, also from the 25 firm of Duane Morris. 38 ITEM NO. 13 1 CHAIR KASSEKERT: Good morning. 2 MR. SORIANO: Good morning. 3 MR. ADAMS: Jack Adams from the Division 4 of Gaming Enforcement. 5 MR. MACK: Good morning, Chair, 6 Commissioners. Sean Mack from Pashman Stein on 7 behalf of the Trustee/Conservator. 8 CHAIR KASSEKERT: Thank you. Good 9 morning. 10 Today the Commission is considering the 11 petition from the Steering Committee of the 12 Secured Lenders seeking, among other things, an 13 approval of an amended and restated purchase 14 agreement regarding the Tropicana Casino Hotel. 15 When we considered and approved the original 16 form of the asset purchase agreement back in 17 April, we included the authorization for Adamar 18 to seek bankruptcy protection, which it has 19 done. Although that process has generally 20 moved forward satisfactorily, the contracting 21 parties have identified a benefit that is 22 available under the federal tax law that can be 23 derived if the asset purchase agreement is 24 amended. Thus, the primary changes proposed to 25 be made to the contract will allow the Secured 39 ITEM NO. 13 1 Lenders to effecuate what is known as a G 2 Reorganization under the Internal Revenue Code. 3 The lenders note in the first count of 4 their amended petition that the primary benefit 5 of the G Reorganization is to provide them with 6 a -- with an historic tax basis for the 7 Tropicana assets rather than a tax basis linked 8 solely to the amount of their $200 million 9 credit bid. 10 As for the remaining six counts of the 11 amended petition, most of the relief sought is 12 technical in nature and will abide in the 13 ultimate disposition of this matter. However, 14 it bears noting that we are also being asked in 15 the petition's third count to approve the 16 Tropicana's plan of reorganization which has 17 already been confirmed by the Delaware 18 Bankruptcy Court. 19 Coincidentally, the Commission has heard 20 a great deal about the reorganization plan when 21 we considered this past August a separate 22 petition to allow the Tropicana Casino Hotel to 23 be acquired by the entity that will emerge from 24 the Delaware bankruptcy. 25 Accordingly, the Commission, while 40 ITEM NO. 13 1 cognizant of all of our relevant prior rulings, 2 is specifically taking official notice under 3 Section 107b of our related prior proceedings 4 in both late April and late August of this 5 year. 6 The Commission will take testimony today 7 in furtherance of its consideration of these 8 varied requests for relief. 9 Before hearing the witnesses, there are 10 a number of exhibits which have been premarked 11 and identified on the list which Mr. Nance has 12 prepared and shared with the parties. 13 Mr. Nance? 14 MR. NANCE: Chair, Commissioners, the 15 premarked exhibits are as follows: The 16 Petitioner has entered ten exhibits. They are 17 premarked in the exhibit list as P-1 to P-10. 18 It's it is my understanding that the 19 Division of Gaming Enforcement -- they are also 20 entering their Exhibit, D-1, which is a letter 21 report dated October 30th, 2009, regarding 22 Petition No. 2950901. 23 CHAIR KASSEKERT: Okay. Thank you. 24 Are all counsel satisfied that the list 25 prepared by the Commission staff accurately 41 ITEM NO. 13 1 identifies the premarked exhibits? 2 MR. BROOKS: Madame Chair, there are a 3 couple of changes. 4 CHAIR KASSEKERT: Okay. 5 MR. BROOKS: If you would. The -- P-5 6 is a direction letter, which is actually 7 addressed to Credit Suisse, an entity -- one of 8 the Credit Suisse entities. And its addressed 9 to Credit Suisse by what would be called the 10 required lenders in the credit facility. In 11 other words, 51 percent of the lenders. And 12 those lenders have approved entry into the 13 amended and restated purchase agreement. And 14 so it's a letter actually to Credit Suisse. 15 CHAIR KASSEKERT: Okay. 16 MR. BROOKS: P-10 is a certification of 17 Scott Butera, and it has a number of exhibits 18 attached to it related to something that was 19 considered by the -- or there was a lot of 20 testimony related to this in the July hearing 21 that was conducted by the Commission. It has 22 to do with the Park Cattle lease arrangement 23 and the Lake Tahoe Horizon Casino. 24 As you may recall, when we were here in 25 July, there had been an interim arrangement 42 ITEM NO. 13 1 entered into by the Lake Tahoe -- by Tropicana 2 Entertainment subsidiary in connection with 3 that casino hotel, and there had been a desire 4 to walk away from that casino hotel, but 5 becuase of licensing, they had to enter into an 6 interim arrangement which called for a 7 carve-out of the casino hotel floor. They ran 8 or operated that carved out casino hotel floor 9 pending the licensing of another entity. 10 Mr. Butera's certification, which is 11 P-10, confirms now that that other entity, an 12 entity controlled by Joseph Yung was licensed 13 by the Nevada gaming regulators. 14 Exhibit A is the confirmation from 15 Nevada licensing. 16 Exhibit B is a casino transition 17 agreement that activate -- the licensing 18 occurred on October 15th. On October 16th, the 19 parties transitioned the casino hotel from 20 Tropicana Entertainment to the new entity. 21 It's Wimar -- a Wimar entity identified. It's 22 identified in the certification. 23 And Exhibits B, C, D, E, F, and G all 24 are documents related to that closing, 25 including Exhibit G, which is an affirmation 43 ITEM NO. 13 1 joinder indicating that the new operator of the 2 assignee of all the leases is the Wimar entity, 3 the entity controlled by Mr. Yung, and that the 4 arrangement or the interim arrangement that 5 existed has now been terminated. 6 And the last exhibit, Exhibit H, is an 7 October 20th letter from counsel for Tropicana 8 Entertainment surrendering the license, the 9 casino license that they had for Lake Tahoe 10 back to the Nevada Gaming Control Board. And 11 so that's Exhibit D. But it's essentially a 12 certification by Scott Butera. 13 CHAIR KASSEKERT: Thank you. Very good. 14 So noted. 15 Mr. Adama? 16 MR. ADAMS: We just have the one 17 exhibit, D-1, which will be my report of 18 October 30th. 19 CHAIR KASSEKERT: Okay. 20 MR. ADAMS: I don't think that's subject 21 to any sealing request at this point, either. 22 MR. BROOKS: It is not, Madame Chair. 23 CHAIR KASSEKERT: Okay. 24 MR. NANCE: That's D-1. 25 MR. ADAMS: D-1. 44 ITEM NO. 13 1 MR. NANCE: Not subject to. 2 CHAIR KASSEKERT: Not subject to 3 sealing. 4 MR. BROOKS: Madame Chair, also, if I 5 could be heard with respect to one other aspect 6 of P-1. 7 CHAIR KASSEKERT: Uh-hum. 8 MR. BROOKS: I've had some conversations 9 with Commission staff in respect to some of the 10 language. And, in particular, we focused on 11 Section 2.1(a)(i) of the agreement. It's on 12 Page 23 of P-1, and that would be, again, 13 Section 2.1(a)(i). That language -- the 14 language that's in the agreement, we've agreed 15 that we would change that language. And for 16 purposes of the record, I would indicate that 17 I've shared that language the Commission staff, 18 and it would be our intent to use the language, 19 the altered language, which I'll read into the 20 record if it's okay with the Commission. 21 CHAIR KASSEKERT: Sure. 22 MR. BROOKS: (i) would now read: Each 23 of the company and the company subsidiary 24 agrees to sell to reorganized Tropicana (and, 25 subject to required gaming approvals,) 45 ITEM NO. 13 1 reorganized Tropicana shall request that each 2 of the company and the company subsidiary agree 3 to transfer, assign, convey, and deliver to 4 Newco and subject to required gaming approvals, 5 the company and company subsidiary agree to 6 transfer, assign, convey, and deliver to Newco. 7 And Newco agrees to accept and the balance 8 would be the same. 9 CHAIR KASSEKERT: The balance would be 10 the same. 11 MR. BROOKS: So we have that one change, 12 and all the parties have agreed to that change. 13 It has to go through a separate direction, 14 another process of the lenders can sign off on 15 it, but that change will be made to P-1 at the 16 time of its execution. 17 CHAIR KASSEKERT: Thank you. 18 Are there any objections to the 19 admission of any of these exhibits, and are 20 there any sealing requests? 21 MR. BROOKS: Madame Chair, we have a 22 sealing request in connection with Exhibit P-1. 23 CHAIR KASSEKERT: Okay. 24 MR. BROOKS: And we've asked that 25 certain exhibits in -- that are attached to 46 ITEM NO. 13 1 Exhibit P-1 be sealed, some sections of those 2 be sealed. They are proprietary. They deal 3 with capital expenditures or proposed capital 4 expenditures, and then they deal with financial 5 projections and numbers. 6 CHAIR KASSEKERT: Thank you. 7 Any ojection, Mr. Adams? 8 MR. ADAMS: No objections. 9 CHAIR KASSEKERT: Thank you. 10 Each exhibit will be so identified and 11 entered for the record and should be referred 12 to by its corresponding exhibit number. And, 13 therefore, I would accordingly grant the 14 Secured Lender's sealing requests. 15 Are there any other procedural matters 16 that need to be brought to our attention at 17 this time? 18 MR. BROOKS: No, Madame Chair. 19 CHAIR KASSEKERT: No. Mr. Adams? 20 MR. ADAMS: No. 21 CHAIR KASSEKERT: Okay. Thank you. 22 We are now set for opening statements 23 which the parties may waive and elect instead 24 to proceed directly to testimony. 25 Counsel, what's your preference? 47 ITEM NO. 13 1 MR. BROOKS: Madame Chair, I'll be 2 brief. 3 The Chair's opening remarks basically 4 summed it up. We -- at some point when we -- 5 as the parties continued to look at the 6 transaction, the transaction of transferring 7 Tropicana Atlantic City to the lenders, 8 consideration started to be -- there was some 9 attention paid to the tax issues, which led to 10 the potential for a G Reorganization as opposed 11 to the contemplated asset sale that was set 12 forth in the asset purchase agreement that the 13 Commission approved in April of this year. And 14 that's led us to the changes that we have 15 before you, and we are prepared to put on some 16 testimony to explain those changes. And 17 basically everything we're doing here today is 18 as a consequence if the G Reorganization with 19 the exception of some of the issues that we had 20 in April, in particular, the potential lapse in 21 the conservatorship. 22 We are prepared to move forward at this 23 time. 24 CHAIR KASSEKERT: Thank you. 25 Mr. Adams? 48 ITEM NO. 13 1 MR. ADAMS: Chair, we would waive any 2 opening statement and go straight to the 3 testimony. 4 CHAIR KASSEKERT: Thank you. 5 All right. Mr. Brooks, you may call 6 your first witness. 7 MR. BROOKS: Thank you, Madame Chair. 8 Call Jordan Bleznick. 9 CHAIR KASSEKERT: Mr. Bleznick, Mr. 10 Nance will swear you you. 11 MR. BLEZNICK: Okay. 12 13 JORDAN BLEZNICK, having been first duly 14 sworn to tell the truth, testified as follows: 15 16 MR. NANCE: Please state your name for 17 the record. 18 THE WITNESS: Jordan Bleznick. 19 MR. NANCE: Thank you. You may be 20 seated. 21 CHAIR KASSEKERT: You may be seated. 22 Mr. Brooks, you may proceed. 23 MR. BROOKS: Okay. Thank you, Madame 24 Chair. 25 49 Bleznick - direct - Brooks 1 DIRECT EXAMINATION BY MR. BROOKS: 2 Q. Mr. Bleznick, by whom are you employed? 3 A. Just want to make sure. Is that all 4 right? 5 Icahn Associates. 6 Q. And in what capacity? 7 A. I'm the Senior Tax Counsel and Vice 8 President. 9 Q. And could you give the Commission the 10 benefit of your background. 11 A. My educational background -- we'll start 12 with college, I guess. 13 Q. Okay. 14 A. Okay? University of Cincinnati, BA in 15 economics. The Ohio State University Law School, JD 16 in law. And New York University Law School, master's 17 degree in tax law. 18 Q. And how about your employment history? 19 A. Employment history, I've been a lawyer 20 for almost 30 years. 21 I'm sorry. 22 (There was a microphone issue.) 23 THE WITNESS: Oh. Is that better? I 24 thought I was because nobody wanted to listen 25 to me. 50 Bleznick - direct - Brooks 1 (Laughter.) 2 THE WITNESS: That's all right. You 3 told me not to be funny, so. 4 (Laughter.) 5 A. All right. Yeah. 6 Q. Employment history. 7 A. Employment history, I've been a lawyer 8 for almost 30 years. I practiced law in Columbus, 9 Ohio, for about three years. And since then I've been 10 in New York City. Most of those years, up until 2002, 11 I was with a law firm which was last known as Gordon, 12 Altman, Butowski, one of the primary clients of which 13 was Carl Icahn and his affiliated companies. For the 14 last seven and a half years, I've been employed in my 15 current position for Icahn Associates. 16 Q. Did there come a point in time in terms 17 of your employment with Icahn where you became 18 familiar with the potential transaction involving the 19 Tropicana Atlantic City? 20 A. Yes. 21 Q. And could you explain that to us? 22 A. Well, we are a -- as everybody probably 23 knows, a large debt holder, lender of the Tropicana, 24 Ada -- you know, the Aztar Company, I guess. And 25 also-- well, actually it's the Aztar Company which 51 Bleznick - direct - Brooks 1 includes Adamar. And I became aware earlier this 2 year, I guess it was in the spring, that there was 3 going to be a potential, what we call the bankruptcy 4 law a 363 sale. I don't know if -- you know, it's a 5 term of art. 6 CHAIR KASSEKERT: We've gotten quite 7 used to it. Yes. 8 (Laughter.) 9 A. When I say it, everybody thinks 363 is a 10 Internal Revenue Code. It's not the Internal Revenue 11 Code. 12 CHAIR KASSEKERT: Right. 13 A. So when I looked at the transaction in 14 the spring, I did some due diligence and some factual 15 inquiries with helps -- you know, with help of others, 16 including various accounting firms and other tax 17 lawyers, and made the inquiry that we were making a 18 credit bid for $200 million for the assets of Adamar, 19 which is predominately the Tropicana Hotel and Casino. 20 And we would get a tax basis in that casino if we paid 21 200 million of $200 million. But after doing due 22 diligence, I realized through looking at certain 23 numbers that the original tax basis in the hands of 24 Adamar historically is over $700 million. 25 And so the challenge became to change 52 Bleznick - direct - Brooks 1 the transaction, mostly for tax purposes, but 2 preserving the economics of the original transaction 3 so that we could enjoy the benefit of the higher tax 4 basis. And the -- just explain why if I could? 5 Q. Sure. 6 A. Why it's important, I think, to 7 understand what the difference is. So if we buy the 8 Tropicana for 200 million, and the value of the 9 Tropicana in five years in Atlantic City as it 10 rebounds and things are on the up-tick, and we want to 11 sell the Tropicana for 600 million, under the old 12 structure, we would have had a gain of 400 million 13 and, therefore, would have had to pay a tax on that 14 amount at 35 percent federal rate. 15 If we sell it under the new structure, 16 we would not have any gain at that number. So it 17 made -- you know, it made quite a difference in that 18 situation. 19 Q. Now, you mentioned that you did due 20 dilligence. What did that due diligence entail? 21 A. Well, due diligence entailed 22 predominately establishing the tax basis of the old 23 property and trying to fit the existing transaction -- 24 the original agreement which was approved, the tax 25 lawyers -- in spite of what many people think, you 53 Bleznick - direct - Brooks 1 know, tax lawyers are experts. I've been working on 2 the -- as an in-house guy for many years now. And I 3 didn't want to upset the apple cart for purposes of 4 this transaction. So I said, is there a fairly simple 5 way to change the transaction so that it would 6 preserve the original economics and we could, in fact, 7 just amend the agreement rather than enter into a new 8 agreement and preserve the tax objectives? And what 9 we did was we amended the agreement. And the main 10 difference, honestly, is that instead of the currency 11 or the purchase price being paid in debt directly, the 12 purchase price for the Adamar -- you know, for the 13 Tropicana is being paid in stock. And that's how it 14 fits into the G Reorganization. That stock that ends 15 up going back to the creditors, that it would have 16 anyways under the original transaction, so the end 17 result is the same. 18 Q. And could you explain -- or you may have 19 already done that. But would you explain? We've 20 heard a lot of testimony or talk about G 21 Reorganization. Could you explain what that is? 22 A. I need a drink of water for that. 23 (Laughter.) 24 A. The G Reorg -- the Internal Revenue Code 25 of 1986 is the main authority in the federal income 54 Bleznick - direct - Brooks 1 tax law. What's referred to as a G is a reference to 2 Section 368 (a)(1)(G) of the Internal Revenue Code. 3 Section 368 -- and I won't mention any other code 4 sections unless asked. Section 368 is the 5 reorganization provision of the Internal Revenue Code. 6 And the concept there is that if you have a company 7 that merges into another company or transfers 8 substantially all of its assets to another company 9 that for tax purposes that's, in effect, a 10 continuation of the old company as opposed to when you 11 buy it for cash or other types of stuff. 12 So the concept here is that 368 13 (a)(1)(G) and refers to a specific type of 14 reorganization. Just for edification, there's A, B, 15 C, D, and F. Those are all -- if everybody wants to 16 learn those, I'll be glad to talk about that as well. 17 But G refers to a reorganization of bankruptcy. So 18 only bankrupt entities who are in conservatorship or 19 otherwise but are in bankruptcy transfer substantially 20 off of their assets to another company here, Newco, in 21 exchange for stock. That's the key here. Stock. And 22 that stock's distributed to the shareholders or 23 creditors of the old company. Then the tax basis and 24 all the tax attributes of the old company become the 25 tax attributes of the new company as if it continued. 55 Bleznick - direct - Brooks 1 So, in effect, it's kind of interesting 2 because we refer to the whole bankruptcy, the top 3 company is the reorganized Trop. It's similar here. 4 For tax purposes Adamar will, in effect, be a 5 reorganized Adamar. Obviously, with the new name, 6 Newco, or whatever the name is. 7 Q. Now, what changes needed to be made to 8 the initial asset purchase agreement in order to 9 effectuate the new G Reorg? 10 A. The main change was the original 11 agreement followed the credit bid, which meant that 12 the purchase price was paid in the claims of 200 13 million. Instead of that, the purchase price is being 14 paid in stock of reorganized Trop, which is the parent 15 of Newco, and that stock is then passing out to the 16 creditors of the old company. That's actually the 17 main change. In doing that, we put language in the 18 agreement, which I'd be glad to explain. And when I 19 saw the red line last night, there was some decent 20 amount of language there, but pretty pretty much all 21 that language says is for that tax purposes, this 22 thing will qualify as a G. And that the parties agree 23 that it will qualify as a G. And the one interesting 24 thing, if I can talk about it, is the tax opinion. 25 Q. Yes. 56 Bleznick - direct - Brooks 1 A. Or you want me to -- 2 Q. Why don't you explain what the lenders 3 are doing to -- in connection with the -- 4 A. Right. 5 Q. -- agreement that it will qualify as a 6 G? 7 A. Okay. And can I name, you know, the 8 professionals that are helping us and stuff? 9 Q. Certainly. 10 A. So as an in-house lawyer, although it 11 would be very easy, I typically go outside on large 12 transactions and get a tax opinion on behalf of the 13 buying entity. And so I retained on our side outside 14 of the bankruptcy estate, I retained KPMG's national 15 office, who I work with frequently, and retained one 16 of the national experts in these types of 17 reorganization transactions to issue an opinion that 18 it will, in fact, be a G Reorganization. They are -- 19 they have assured me that they will issue what we call 20 in tax law a more-likely-than-not opinion. So they 21 think the right answer is that it is, in fact, a G 22 Reorganization. And I believe the agreement even 23 refers to that opinion as one of the conditions of 24 closing the transaction, that we deliver that opinion. 25 Q. Is there any expectation in terms of 57 Bleznick - direct - Brooks 1 timing with respect to that opinion? 2 A. The opinion has pretty much been vetted 3 out, which is, you know -- in other words, we have 4 been assured that we will get the opinion. We've 5 reviewed the facts and assumptions which are in -- are 6 the most important part of this opinion because you 7 have to make sure that the right facts are there to 8 support the G. And a draft of the opinion has been 9 written. I haven't reviewed it yet, but KPMG in the 10 next, I would say, week or so will have a complete 11 draft of the opinion. We've gone over every issue, 12 which are numerous. And I don't think anybody 13 unless -- I mean, I'd be glad to explain it if you 14 like, but they're mostly technical tax issues. 15 We have -- we have resolved -- there's 16 no tax issue that has been unresolved at this point. 17 And they're very comfortable. And I've talked to them 18 yesterday just to confirm, very comfortable in this 19 opinion. 20 Q. And you expect the opinion will issue 21 some time in the next 30 days? 22 A. Absolutely. I mean, the final opinion 23 can't be delivered until closing, because by 24 definition it has to be a final opinion. But a -- 25 what I would call a substantially complete opinion 58 Bleznick - direct - Brooks 1 will be done within 30 days, certainly. 2 Q. Now, I'd like to take you a little bit 3 beyond closing. Assuming the closing occurs, you've 4 got the opinion, or the opinion has been issued, what 5 happens next in terms of the G Reorg? 6 A. Well, at that point you'll have Newco. 7 You'll have the new company, Newco, and its parent. 8 And it's primarily a tax reporting function, so that 9 when we do our opening tax return, we'll reflect the 10 fact -- you have to do some filing saying you did a G, 11 and you file tax returns. You know, basically, not 12 even explaining the G, but just based on the premise 13 that there is a G. So that you would show your 14 opening tax basis at 700 million instead of 200 15 million. You would do your depreciation based on 16 that. In other words, you would just do it as if you 17 were the old company. And so you would sort of 18 continue along, you know, with some exceptions, 19 treating -- it's really a tax-return function. 20 Q. And if the IRS disagrees with the -- 21 with the opinion and disagrees that it's a G Reorg, 22 will that have any impact on the transaction? 23 A. No. The transaction will be done when 24 it's done. If they challenge it and if -- you know, I 25 don't think that they would be successful, but if they 59 Bleznick - direct - Brooks 1 were, it would just be a matter of, in effect, going 2 back to where we were before we did it. Which is we 3 would have a $200 million tax basis, which was the 4 premise of the original deal. So I only look at it as 5 a positive. 6 Q. I want to change directions here a 7 little bit. I want to talk a little bit about 8 existing leases that are currently involved at the 9 property. Are you familiar with leases that exist 10 between Adamar, Atlantic-Deauville, and Adamar Parking 11 Garage? 12 A. Yeah. I'm generally familiar with those 13 leases. Yes. 14 Q. And now, when the -- if the transaction 15 gets the approved or requisite approvals and closes, 16 will those lease agreements remain in place? 17 A. Yes. 18 Q. Okay. Could you explain how or why they 19 would remain in place? 20 A. Well, the structure of the transaction 21 really having nothing to do with the G, but the 22 ultimate structure is that there will be Newco and 23 Newco Sub. Newco owns Newco Sub. The nonconservator 24 assets are going to Newco Sub and the conservator 25 assets are going to Newco. So we'll have two separate 60 Bleznick - direct - Brooks 1 companies. And for tax-law purposes, you still -- if 2 you have two companies, you have to reflect 3 transactions on an arm's length basis even though 4 they're related parties. And therefore, you know, you 5 have to maintain fair market value leases in order to, 6 in effect, get the right tax treatment in terms of -- 7 In other words, let me give you a simple 8 example that I own a piece of property. Okay? And 9 it's worth -- we'll just use the Trop. I own a piece 10 of property worth $200 million unencumbered. Now, I 11 lease that property to a third party, and I only 12 charge them a hundred thousand dollars a year. Okay? 13 And the lease is 99 years. And now I want to sell 14 that property. Well, I'm not going to get 200 million 15 for that because it's subject to a 99-year lease at a 16 hundred thousand, so I'm not going to get the benefit. 17 Now, a lot of times affiliated 18 companies, which, you know, we're stepping into, enter 19 into inner company arrangements at other than fair 20 market value because they say we don't really care. 21 Which, you know -- I'm not disagreeing. We own the 22 whole company. But because you have Newco and Newco 23 Sub, we have to respect each company for tax purposes. 24 So we, you know -- I clearly believe that you should 25 reflect it on an arm's length basis, and that's really 61 Bleznick - direct - Brooks 1 what we're doing here. 2 Q. So that would result in a change in 3 terms of the rents? 4 A. Yeah. Well, I believe so. I mean, you 5 know, I don't know the rationale of all the rents. 6 But it seemed to be based on the predecessor's 7 situation, which I'm not sure we need to understand. 8 But, yeah. The concept would be, we would adjust 9 the -- it's all going to be under the same economic 10 umbrella, so nothing really changes. But for tax law, 11 there are two companies and we want to comply with the 12 sanctity of separate company. 13 Q. Are you anticipating any other changes 14 to the leases other than the amount? 15 A. Other than, you know, just memorializing 16 the fair market rents. I personally don't. You know, 17 I'm not the one sitting here and doing -- 18 fortunately -- looking at all these intercompany 19 relationships. I had enough trouble finding my room 20 last night. 21 (Laughter.) 22 A. I didn't know which sub lease I was 23 stepping on. 24 (Laughter.) 25 MR. BROOKS: I have no further 62 Bleznick - cross - Adams 1 questions, Madame Chair. 2 CHAIR KASSEKERT: Thank you. 3 Mr. Adams? Cross-examination? 4 MR. ADAMS: I just have a few, Chair. 5 6 CROSS-EXAMINATION BY MR. ADAMS: 7 Q. Do I take it then, that when the rents 8 are adjusted, you anticipated that they would be 9 lower? 10 A. Well, I don't know how much detail 11 anybody wants to hear. One lease for one of the 12 garages was at a much higher than fair market rent. I 13 mean, and it could have been driven by some fact at 14 the time, but it wasn't driven by the -- by the tax 15 law, for sure. And then some rents are very low. So 16 there's no -- I mean, I can only conjecture, which I 17 don't know if I should do. 18 Q. That's okay. That's fine. 19 With respect to -- you talk about with 20 respect to federal tax purposes. What about with 21 respect to any New Jersey state taxes that might be 22 going due and owing? 23 A. For the most part, although New Jersey 24 is not exactly the same as federal, it will follow the 25 general tax treatment. 63 Bleznick - cross - Adams 1 Q. All right. 2 A. For the most part. There may be 3 adjustments, like in terms of how many years you can 4 carry forward certain tax -- you know, New Jersey 5 has -- every state has slightly different rules, but 6 the basic concept's the same. 7 Q. All right. So the basic concept was -- 8 A. Yes. 9 Q. -- the basis going on is going to be the 10 same? 11 A. Yes. Correct. 12 Q. And just repeat again, the tax opinion 13 would be issued by whom again? 14 A. KP -- 15 Q. KP -- 16 A. KPMG. The accounting firm of KPMG. 17 Q. And I think you said this pretty 18 clearly, the main change that you described and as 19 will be reflected in this transaction is that there 20 will be a purchase of these assets and stock would be 21 used to purchase those assets? 22 A. Correct. 23 MR. ADAMS: I don't have any other 24 questions. 25 CHAIR KASSEKERT: Thank you. 64 Bleznick 1 Any questions from the Commissioners? 2 Commissioner Epps? 3 VICE CHAIR EPPS: I have a couple 4 questions. 5 How was the original tax base -- the 700 6 million tax basis calculated? How do we get 7 there? 8 THE WITNESS: That was a very difficult 9 and very good question. That actually was the 10 crux of the analysis. 11 We had to go back to the predecessor of 12 the predecessor. In fact, when the actual 13 Adamar was formed and Adamar going back, I 14 think, 20 years purchased originally the land 15 for the Tropicana. And then there were 16 improvements built in -- you know, my 17 recollection without particular knowledge is 18 they built a north tower. Then they built the 19 south tower. Then they built the Havana tower. 20 So we had to track every transaction going back 21 and have a cost basis done of how a particular 22 piece of property and then take the 23 depreciation. So, for example -- I don't know 24 the numbers, but let's say the entire cost for 25 everything in the Tropicana, which I think is 65 Bleznick 1 about right, was about a billion dollars. If 2 you add in the cost of everything over the 3 last -- I think that half of that was done in 4 the last eight, nine years. But I don't know 5 the -- you know, I'm not saying the exact 6 numbers. So you take that billion dollars, and 7 then you take off the depreciation of the 8 building over that period. Let's say that was 9 300 million. That would leave Adamar with a 10 tax basis in the Tropicana of 700 million. So 11 we had to go back and have internal people, 12 accounting people, track that tax basis going 13 back. And now they carry it on the books for 14 taxes. We have reports done breaking out the 15 various pieces. That adds up to a little more 16 than 700 million. 17 VICE CHAIR EPPS: Okay. And, actually, 18 Mr. Brooks took you to what was going to be my 19 next question about if the taxing authorities 20 didn't approve the G reorganization. And you 21 said it would have no impact on the 22 transaction. It would just go back to the $200 23 million tax basis. That would have been the 24 credit bid. 25 THE WITNESS: Right. 66 Bleznick 1 VICE CHAIR EPPS: Okay. 2 THE WITNESS: And you want me to 3 elaborate on that or -- 4 VICE CHAIR EPPS: Well, I'm going to ask 5 you a question. 6 THE WITNESS: Whatever you want. Okay. 7 VICE CHAIR EPPS: In the 200 million 8 credit bid -- when it was a credit bid 9 transaction, was there stock that existed 10 anyway? Or did this stock have to be created 11 in order to make this stock purchase? 12 THE WITNESS: Yes. And that's another 13 good question, which gets to the crux of the 14 transaction. The old transaction -- it's 15 really a matter of form and sequence. The old 16 transaction, the first step was you take 200 17 million of the claims, and you put them into a 18 Newco for stock in Newco. So the creditors 19 first own Newco. Then Newco took those claims, 20 and they bought the Trop for 200 minor claims. 21 So at the end of the day, the old creditors 22 still own Newco or, you know, the parent of 23 Newco, and the claims went over back. So 24 that -- that was the old transaction. 25 The new transaction ends up in the same 67 Bleznick 1 place, and it's the same -- everything ends up 2 the same way. But instead of the claims going 3 into Newco first, the stock of Newco binds the 4 Trop first. And then the stock's distributed 5 to the lenders for 200 million of claims. So 6 when you do the -- it's like a triangle. When 7 you finish the triangle, you're in the same 8 place. 9 I don't know if that makes sense, but 10 that's what's happening here. 11 VICE CHAIR EPPS: Okay. Now, my next 12 question then is, in the event that the taxing 13 authorities do not agree that this is a G 14 transaction, and it goes back to, I guess, the 15 first two legs of the triangle, one leg of the 16 triangle goes away. What happens to the stock? 17 THE WITNESS: Well, everything ends up 18 in the same place. But what would be different 19 is if it doesn't qualify as a G, it would be 20 quote-unquote a taxable transaction. And, 21 therefore, you don't get the G treatment, and 22 you would just be deemed to buy it for 200 23 million. 24 In other words, they'll say, well, the 25 stock -- the stock is worth the same as the 68 Bleznick 1 claims, which is 200 million. But for whatever 2 reason, you don't qualify for a G. So they're 3 just saying you still paid 200 million. Even 4 though -- and you don't qualify because you're 5 buying it, and you're not getting this G 6 Reorganization, then you don't get the high 7 basis. You get the lower basis. 8 VICE CHAIR EPPS: Okay. That was all I 9 had. 10 CHAIR KASSEKERT: Commissioner 11 Harrington? 12 COMMISSIONER HARRINGTON: No. That's 13 okay. 14 CHAIR KASSEKERT: Commissioner 15 Sommeling? 16 COMMISSIONER SOMMELING: No questions, 17 Madame Chair. 18 CHAIR KASSEKERT: Okay. I just have 19 two. 20 Can you give me a historical, you know, 21 as you looked at this Section G provision, 22 there was no impact on a historical basis going 23 back in the tax years, only in the current year 24 as part of the transaction; correct? 25 THE WITNESS: Well, in order to 69 Bleznick 1 determine the current year transaction, you 2 have to go back and look at the historical tax 3 basis and roll it forward. 4 CHAIR KASSEKERT: Right. But you 5 weren't going back and changing -- 6 THE WITNESS: No. The only thing we 7 were doing was due diligence. So we went in 8 and said -- yeah. We -- honestly, how it 9 happened is, you know, we at Icahn have done, 10 you know, a decent number of these types of 11 deals over the years. And, you know, we've 12 done due diligence. And so you go in and, you 13 know, you look at the company, and you say, 14 geez, do things add up here? 15 CHAIR KASSEKERT: Uh-hum. 16 THE WITNESS: We're paying 200, but 17 this, you know, is a good piece of property, 18 you know, unfortunately, the economy is the way 19 it is right now. So you look at it, and you 20 read the, you know, public documents, you say, 21 geez, this company, you know, they paid a lot 22 more than 200 to build this thing. You know, 23 they paid a billion dollars; right? And so I 24 said, there's a disconnect here. You know, 25 maybe we can get that higher tax basis. 70 Bleznick 1 And so, you know, it was just based on 2 looking at public filings. Then my job is to 3 take that what's called hunch or you, you know, 4 a high-level analysis and say to the internal 5 people, am I right? And we have to go in there 6 and say you are right. Because you don't want 7 them -- you know, you have to be pretty strong 8 because, you know, you are changing the 9 transaction. So you want to go in there and be 10 pretty adamant that you are right, but you 11 might not be right. And in this case it proved 12 out that there was a lot of tax basis there 13 because of the fact that a lot of money was 14 spent. I mean, it's a nice property, and a lot 15 of money was spent to build that property. 16 CHAIR KASSEKERT: And I guess the second 17 follow-up question is, moving forward, is there 18 any impact on future tax years? I think from 19 what I understand you, from your testimony, 20 we're really talking about the transaction 21 itself, and the only way there's any 22 implication is that if at some point you want 23 to sell, you want to have a higher basis. 24 THE WITNESS: Well, that's the main -- 25 the main thing is, you know, they'll be some -- 71 Bleznick 1 you know, maybe they'll be some depreciation or 2 losses because of the fact we have the higher 3 basis. 4 CHAIR KASSEKERT: Uh-hum. 5 THE WITNESS: We make it. But in the 6 next few years, it probably isn't that 7 significant. But the main thing is -- and 8 we're not -- obviously, we're not looking to 9 sell. 10 CHAIR KASSEKERT: Right. 11 THE WITNESS: If you look at our past 12 history, we have sold things, but we've held on 13 to our other casinos for many years. And -- 14 but ultimately, you know, things are sold. But 15 we also could get -- even if it's not sold, we 16 could get benefits as well. 17 CHAIR KASSEKERT: Uh-hum. 18 THE WITNESS: Because we have the higher 19 tax basis, over a period of years we could get 20 some additional depreciation, deductions, 21 things like that, that would offset future 22 taxes. 23 CHAIR KASSEKERT: All right. 24 Commissioner Epps? 25 VICE CHAIR EPPS: Does future capital 72 Bleznick 1 expansion work -- how does that impact your tax 2 basis? Does that work? 3 THE WITNESS: That's additional. In 4 other words, let's say there's a future 5 Capex -- and I have no idea what the Capex is 6 projected to be. There's two types of Capex. 7 There's like maintenance. Maintenance is 8 pretty much an expense. Then you have what -- 9 you know, what I think you're referring to is 10 regular Capex to build, let's say, you know -- 11 expand another part of the garage or whatever. 12 And that would just be additional tax basis on 13 top of the 700. 14 CHAIR KASSEKERT: Any other questions? 15 Anything on redirect? 16 MR. BROOKS: Nothing further, Madame 17 Chair. 18 CHAIR KASSEKERT: Anything on recross? 19 MR. ADAMS: Nothing. 20 CHAIR KASSEKERT: Thank you. 21 You may step down. 22 THE WITNESS: Thank you. 23 CHAIR KASSEKERT: Mr. Brooks, you may 24 call your next witness. 25 MR. BROOKS: Madame Chair, call Kyle 73 Pasewark - direct - Brooks 1 Pasewark. 2 CHAIR KASSEKERT: Mr. Pasewark, Mr. 3 Nance will swear you in. 4 5 KYLE PASEWARK, having been first duly 6 sworn to tell the truth, testified as follows: 7 8 MR. NANCE: Please state your name for 9 the record. 10 THE WITNESS: Kyle Pasewark. 11 MR. NANCE: Thank you. 12 CHAIR KASSEKERT: You may proceed, Mr. 13 Brooks. 14 MR. BROOKS: Thank you, Madame Chair. 15 16 DIRECT EXAMINATION BY MR. BROOKS: 17 Q. Mr. Pasewark, why whom are you employed? 18 A. Debevoise & Plimpton. 19 Q. And in what capacity? 20 A. Senior Associate. 21 Q. Were you involved at all with the 22 amended and restated purchase agreement, the 23 negotiations and drafting of that document? 24 A. Yes. 25 Q. And could you explain how you were 74 Pasewark - direct - Brooks 1 involved? 2 A. I was the lead associate representing 3 the Trustee/Conservator. 4 Q. Now, you've heard Mr. Bleznick's 5 testimony with respect to the changes in the agreement 6 we related to the G Reorganization. Could you explain 7 to the Commission any changes that were made to the 8 original asset purchase agreement that were unrelated 9 to the G Reorganization? 10 A. Sure. As Mr. Bleznick's accurately 11 phrased, most of the changes were related to the G 12 reorg, and the revised structure based on the 13 Commission's August ruling. There were certain 14 changes that were unrelated to those, and I think they 15 fall into a couple of categories. One is just 16 cosmetic changes that reflected updates to reflect the 17 current facts on the ground deleting vestigial 18 provisions such as bankruptcy proceedings that already 19 occurred, the elimination of, you know, buyer 20 representative and joinder provisions. Because we now 21 had a buyer that was going to execute the agreement. 22 Things like that. 23 The second category of changes, I think, 24 occurred in Section 3.2 A (iii) which is the closing 25 certificate that is to be delivered prior to closing. 75 Pasewark - direct - Brooks 1 I think there are two principal changes there. One is 2 that it became clear that the original agreement did 3 not have a mechanism to return excess money to the 4 buyer in case the -- in case claims were overpaid. So 5 there was a mechanism added for that. And second were 6 just mechanical or changes to more clearly specify 7 what kinds of claims were going to be paid. 8 I think the third principal change in 9 the agreement was contemplating the possibility that 10 what if this agreement does not close? We had an 11 April agreement, and the provision that we -- that the 12 parties agreed to would -- if this agreement is 13 terminated, with the exception of certain narrow 14 circumstances, that we would revert then to the prior 15 agreement with an automatic extension of the outside 16 date for completing the agreement. And I think those 17 were really the three areas that were not G Reorg or 18 parent related. 19 Q. In connection with -- was that Section 20 9.2A, the last change you described, the Section 9.2A 21 of the agreement? 22 A. Yes. 23 Q. And what was the basis for wanting that 24 provision in the agreement? 25 A. Well, the basis was from the -- from the 76 Pasewark - direct - Brooks 1 Trustee/Conservator's perspective, the basis was that 2 we had a signed agreement from April, and I think that 3 while the parties were willing and, in fact, happy to 4 accommodate the required changes with respect to the G 5 Reorg and the revised parent structure, I think all of 6 the parties also wanted to be sure that the deal that 7 we had in place would still be in place. And if there 8 were -- if for any reason the revised deal didn't work 9 out. 10 MR. BROOKS: Okay. No further 11 questions, Madame Chair. 12 CHAIR KASSEKERT: Mr. Adams? 13 MR. ADAMS: No questions. 14 CHAIR KASSEKERT: Let me ask at this 15 time if the Commissioners have any questions? 16 COMMISSIONER SOMMELING: No questions, 17 Madame Chair. 18 CHAIR KASSEKERT: You may step down. 19 Thank you. 20 Mr. Brooks, you may call your next 21 witness. 22 MR. BROOKS: No other witnesses, Madame 23 Chair. 24 We do have the certification that I've 25 already described that we moved into evidence 77 ITEM NO. 13 1 as P-10. 2 CHAIR KASSEKERT: Thank you. 3 MR. BROOKS: But that will be the only 4 testimony, if you will. That I have to that. 5 CHAIR KASSEKERT: Thank you. 6 That's been moved into evidence. 7 Mr. Adams, do you have any witnesses? 8 MR. ADAMS: I do not. 9 CHAIR KASSEKERT: Very good. 10 Before inviting the parties to make 11 closing statements, I would note that the 12 seventh count is included in the just recently 13 filed amended petition, which the Division has 14 not had any realistic opportunity to reply in 15 writing. Thus, if counsel wishes to file a 16 posthearing submission, please so note during 17 your closing. 18 And, with that, Mr. Adams, I'll ask you 19 to proceed if you have a closing statement. 20 MR. ADAMS: With respect to that 21 comment, we would not be submitting anything in 22 writing posthearing today on that issue. 23 However, I might as well just start out 24 with that issue. 25 CHAIR KASSEKERT: Okay. 78 ITEM NO. 13 1 MR. ADAMS: Because that, to me, was one 2 of the main amendments to the petition that 3 goes into some detail about an issue which, for 4 want of a better expression, is in my mind how 5 many dots can we get on a head of a pin? Is 6 the way I -- I can't help but think of it in 7 any other way than that. 8 However, having said all of that, I'm 9 just going to say right upfront we do not 10 oppose any of the requested relief as detailed 11 in Count 7 and the rest of the counts as we 12 made reference to in our previous letter, as 13 they have requested in the other six counts. 14 But this -- this moment-in-time concept is like 15 putting that little dot on the head of the pin 16 here, and I don't know that we have to go -- or 17 you have to go to that place -- 18 CHAIR KASSEKERT: Uh-hum. 19 MR. ADAMS: -- for this transaction to 20 close. And there being a sale, as has been 21 described basically of assets, by Adamar, 22 Manchester Mall, and/or the Conservator. And 23 the reason I say that is, I have focused 24 somewhat on the New Jersey sale or the new sale 25 order, specifically Item I. I think it's on 79 ITEM NO. 13 1 Page 20. If I have the same version at this 2 point, which may or may not be the case. It 3 says on the closing date, immediately prior to 4 but subject to the occurrence of closing, 5 pursuant to Section 5.43B of the bankruptcy 6 code to the extent applicable, all right, 7 title, and interest that the Conservator has in 8 the acquired assets shall be transferred to the 9 relevant debtor. 10 Now, we know under other provisions of 11 the conservator statute that he has basically a 12 casino license at this point. 13 CHAIR KASSEKERT: Uh-hum. 14 MR. ADAMS: And so whenever that occurs, 15 the so-called moment in time, it's presumably 16 going to occur to someone who's going to have 17 an ICA. And I think that's very significant. 18 I see that as just a transition. 19 CHAIR KASSEKERT: Uh-hum. 20 MR. ADAMS: And for you necessarily to 21 start getting into milliseconds or minutes or 22 documents actually transferring from one to the 23 other, I don't think you have to go there. And 24 on top of that, even if you come back to 25 Adamar, the person who basically owns Adamar at 80 ITEM NO. 13 1 this point and controls Adamar is the 2 Conservator. They're the ones that filed the 3 Chapter 11. 4 CHAIR KASSEKERT: Uh-hum. 5 MR. ADAMS: I don't think you need it 6 really. But having said all that, if you have 7 any questions, I'd be happy to answer them. 8 Maybe the thought occurred to me if you 9 really still have a problem with it, we'll 10 include the Conservator or the Trustee who 11 controls Adamar in the ICA. I see it as a 12 pretty straightforward situation here. Because 13 it's not as if Justice Stein is going to take 14 the stock and try to do something with it. 15 (Laughter.) 16 MR. ADAMS: Other than pass it over -- 17 CHAIR KASSEKERT: Over. 18 MR. ADAMS: -- to the people who want it 19 who are paying for it, basically. 20 Any other questions, I'll be happy to 21 answer. 22 CHAIR KASSEKERT: Let me ask if there 23 are any questions with respect to that 24 particular provision before we hear from -- 25 COMMISSION SOMMELING: For an 81 ITEM NO. 13 1 explanation of that provision, no. 2 CHAIR KASSEKERT: Okay. Very good. 3 Commissioners Epps? No. Okay. 4 Mr. Brooks? 5 MR. BROOKS: Thank you, Madame Chair. 6 I guess the concern -- and I'll start 7 with Count 7. The concern is that the 8 Trustee/Conservator is not in bankruptcy. The 9 Trustee/Conservator is not part of the 10 bankruptcy. The bankruptcy is Adamar and 11 Manchester Mall. The goal is for Adamar and 12 Manchester Mall to transfer its assets free and 13 clear of any liens, claims, encumberances. 14 And, in fact, that's a contractual obligation. 15 And, in fact, the New Jersey sale order 16 provides that it can do so. But the 17 Conservator isn't part of that. The 18 Conservator is not in bankruptcy. It's Adamar 19 that's in bankruptcy. And under Section 130.2A 20 of the Casino Control Act, title to the assets 21 of Adamar that relate to Tropicana Atlantic 22 City have vested per the statute in the 23 Conservator. 24 So the problem is that we're in a 25 situation where Adamar is transferring its 82 ITEM NO. 13 1 assets, but it doesn't have the full bundle of 2 sticks. The statute -- by virtue of the 3 statute, the Trustee/Conservator has legal 4 title, if you will, to a portion of the sticks 5 because of the fact that the statute says title 6 vests in him. And, therefore, the Trustee/ 7 Conservator is not in a position to transfer 8 his portion of the bundle of sticks to the 9 buyer free and clear of any liens, claims, or 10 encumbrances because he's not in the 11 bankruptcy. 12 So the concept is that the assets go 13 back -- for purposes solely of closing and 14 transferring, go back to Adamar, so that Adamar 15 is then in possession of the full bundle of 16 sticks and can transfer those pursuant to the 17 bankruptcy free and clear of any liens, claims, 18 and encumbrances. That's the idea. And that's 19 the main purpose behind this. 20 There's also a title issue. We're 21 asking -- we need, and it's a requirement that 22 we get title insurance for the insurer to 23 ensure this title. And we haven't finalized 24 that process, but a concern was raised in 25 connection with obtaining title insurance with 83 ITEM NO. 13 1 respect to this issue. And the question being, 2 can the Conservator transfer these -- his 3 title -- his title in connection with the 4 transaction given the circumstances? Again, 5 per the statute, legal title to those assets 6 belongs to the Conservator, not Adamar at this 7 point. And so that's an issue. 8 Now, I suppose a separate agreement 9 could be raised in that regard, but then we get 10 back to the bankruptcy issue. And, again, the 11 main concern is that the transfer be 12 accomplished with -- free of liens, claims, and 13 encumberances. And that's a problem. I mean, 14 this is a bankruptcy state had has liens and 15 claims and encumbrances, some of which will be 16 assumed per the terms of the amended restated 17 purchase agreement, but not all. And there's 18 issues with respect to that, not the least of 19 which is Adamar's guaranty of the bond debt. 20 So this momentary lapse, which is what I 21 really think it is, a momentary lapse in the 22 conservatorship -- solely to allow the transfer 23 to take place and give Adamar the full bundle 24 of sticks accomplishes all those goals, and it 25 does so in a moment in time, a momentary lapse. 84 ITEM NO. 13 1 And it would be subject to immediately upon the 2 the transfer, the conservatorship be 3 reestablished or coming back to life, if you 4 will, and Adamar having the obligation to 5 immediately transfer the stock that it gets 6 from reorganized Tropicana to the lenders. 7 And that's what we're asking for. So 8 that there's no question, there's no issues, 9 there's no doubt that the full bundle of sticks 10 transferred, as everyone intends. The language 11 that Mr. Adams cited in bankruptcy, in the sale 12 order, the New Jersey sale order, was actually 13 created, I think, with that in mind, the 14 transfer -- the transfer that we're asking for 15 in mind. So there's no question about that. 16 So, again, the Trustee/Conservator is 17 not in bankruptcy, and whatever he transfers 18 would not be free of any claims, liens, and 19 encumbrances that might exist vis-a-vis his 20 title. And, again, that's the issue. 21 So that's the relief we're looking for. 22 CHAIR KASSEKERT: Mr. Adams, do you have 23 any response to that? 24 MR. ADAMS: Just a couple comments on 25 it. 85 ITEM NO. 13 1 Whatever -- that's why I focused on this 2 New Jersey sale order language, "to the extent 3 applicable." Well, he's a Conservator. And, 4 yes, the statute says there's title here. But 5 I don't think Mr. Brooks is suggesting anything 6 contrary what I said in that I envision he's 7 going to be there signing documents or, in 8 effect, signing documents. And I think if you 9 read the entire New Jersey sale order, it's 10 clear the main focus is that assets that are 11 titled in Adamar which he controls, not just as 12 a conservator but basically because he controls 13 Adamar, he's giving that up. And it is being 14 done free and clear of all liens and 15 encumbrances. And there's no -- I don't see 16 any magic here in splitting hairs about what's 17 going to happen at this closing. And 18 necessitating some kind of instantaneous waiver 19 of licensure that might exist, I don't think -- 20 I don't think that's even comprehended here 21 because what we're talking about is a closing 22 where these documents are going to pass and 23 title is going to be given pursuant to this 24 bankruptcy order, free and clear of these 25 claims of anybody who had claims. 86 ITEM NO. 13 1 CHAIR KASSEKERT: Let me just ask -- 2 Do you have a question? 3 VICE CHAIR EPPS: Yeah. I have a 4 question. 5 CHAIR KASSEKERT: Commissioner Epps. Go 6 ahead. 7 VICE CHAIR EPPS: Are Adamar and Justice 8 Stein two different people in this situation? 9 In that, it's either Adamar has the title or 10 Justice Stein has the title even if he has 11 control of Adamar. So at some point because 12 Adamar is doing the transaction, Stein has to 13 give his title to Adamar so that they can 14 transfer it. 15 MR. ADAMS: Well, it's covering the 16 bases. That's the way I look at this. It's 17 covering all the bases. No one knows for sure. 18 This is the first time I'm aware that we're 19 facing this issue in New Jersey where we have a 20 Casino Control Act statute that says all title 21 vests in the conservator. Okay? So is there a 22 declaratory ruling here that's necessary from 23 the bankruptcy court? No, not necessarily. 24 Because if he's giving whatever he has -- 25 that's what this language focuses in on. The 87 ITEM NO. 13 1 court obviously was aware of this specifically. 2 To the extent applicable. So if there is 3 something that he's got different than what 4 Adamar has in Manchester, because I assume 5 documents are going to be signed by him on 6 behalf of Adamar and Manchester transferring 7 whatever assets are in the names of those 8 companies. We're not just -- because, as Mr. 9 Brooks said, yeah, the Trustee himself 10 individually didn't go into bankruptcy. And 11 I'm merely -- that's acceptable. Because he's 12 not really -- I think what you're getting at, 13 sitting there owning or having title to this 14 individually, is he? 15 VICE CHAIR EPPS: Right. 16 MR. ADAMS: No. It's as Conservator. 17 And that only relates to Adamar and Manchester. 18 And that's why it's in there. 19 VICE CHAIR EPPS: So you -- 20 MR. ADAMS: Just to cover. 21 VICE CHAIR EPPS: So you -- 22 MR. ADAMS: It's almost like a quick 23 claim deed. 24 VICE CHAIR EPPS: So you're saying -- 25 MR. ADAMS: If I have any, you know, 88 ITEM NO. 13 1 right, title, or interest, I'm giving it up. 2 It's over here. 3 VICE CHAIR EPPS: So your proposal is a 4 three step, and it could be a two step. 5 Meaning the transfer could go directly from the 6 Conservator to the -- 7 MR. ADAMS: Well, if you do it that way, 8 just that way, as Mr. Brooks has pointed out, 9 he's not in bankruptcy. 10 VICE CHAIR EPPS: Right. 11 MR. ADAMS: Individually. Or even as 12 Conservator, per se. But he's in there. 13 That's the -- that's the anomaly, whatever you 14 want to call it, about our statute versus this 15 bankruptcy and how this is proceeding out of 16 the bankruptcy. 17 But, again -- you know, I don't think 18 you necessarily have to be that concerned about 19 all that because this order provides that 20 whatever he's got, he's giving up. We've heard 21 the process, how it's going to work. And at 22 the end of the day, the ones with the stock are 23 going to be the creditors, and they're the ones 24 that are going to have the ICA presumably. 25 And/or whatever -- speaking of that -- 89 ITEM NO. 13 1 mechanisms we decide or you decide go along 2 with that ICA. Whether there's going to be a 3 conservator there, a new conservator that's 4 going to effectively take over because we don't 5 have a plenary license involved here, even 6 though we had a conservatorship, and the 7 statute says it's to be treated like a casino 8 license. 9 CHAIR KASSEKERT: Yeah. 10 MR. ADAMS: So there's really not that 11 big a gap here. 12 CHAIR KASSEKERT: Let me just ask -- I 13 want to ask Mr. Mack to weigh in on behalf of 14 the Conservator/Trustee just to see if you have 15 an opinion with respect to those arguments. 16 MR. MACK: Yeah. I would just add now, 17 putting on a couple of metaphors that are out 18 here today. The bundle of sticks. Possession. 19 That's one of the big ones. Adamar still has 20 that. Justice Stein hasn't taken the slot 21 machines out. Possession is still here. The 22 statute gives him this one stick, the statutory 23 title, the vesting of title that Mr. Brooks 24 referred to. And all we're trying to do -- as 25 Mr. Bleznick's explains, there's this triangle. 90 ITEM NO. 13 1 We pass this stuff around, and as one of the 2 corners of the triangle is the bankruptcy 3 court. This one stick is sitting outside the 4 bankruptcy court, and some way we just need to 5 to figure out while we're all sitting at the 6 closing table, this triangle happens. Goes 7 down, it goes over to the bankruptcy. Justice 8 Stein just wants to pass that stick along so 9 the triangle can continue and that this stick 10 can join in, get in the clearance of the 11 bankruptcy process. And so all we're trying to 12 do is figure out how does that happen? It's 13 the needle -- angels on the top of the pin. 14 But somebody needs to figure out we have to do 15 that. Whether it's a momentary lapse of time 16 or ruling that says, you know, that we want to 17 effectuate the transfer that this whole statute 18 is designed to accomplish, the transfer. 19 You're allowing the Trustee, the Conservator to 20 pass that title momentarily at the closing to 21 then complete this transaction. 22 And that's really all this is, figuring 23 out that little mechanism to get us over that 24 little hurdle there. 25 CHAIR KASSEKERT: Yeah. Mr. Brooks? 91 ITEM NO. 13 1 MR. BROOKS: Madame Chair, exactly 2 right. We're covering bases. I mean, Mr. 3 Adams is right. We're covering bases because 4 of a quirk. If this was the typical -- I don't 5 know that any of this would be typical. But if 6 this was a situation where the Conservatorship 7 was ending, then 130.8 covers that situation. 8 We have a discontinuation. No issue. Because 9 there was a discontinuation. 10 The problem that we have here is that we 11 expect that the transfer would occur pursuant 12 to an interim authorization, granted interim 13 authorization. That's not a casino license. 14 In order for the Tropicana to continue to 15 operate its casino, we're going to need to keep 16 the Conservator in place post-close. Normally 17 we would not. But we would have to solely to 18 keep it as a licensed operation. Therefore, we 19 have -- that's the conundrum. That's what 20 creates this entire conundrum. We have 21 continuation of the Conservatorship, and that's 22 what really is the problem and why we're 23 covering bases. 24 And I would add one other thing. We 25 also a ruling from the Delaware Chancery Court 92 ITEM NO. 13 1 that the -- the act of the employment of the 2 Conservator did take title away such that it 3 caused a vio -- a breach of the indenture. So 4 you have one ruling that has occurred prior to 5 this point in time where one court looked at 6 this, the Delaware Chancery Court and said, 7 yeah, title shifted. So we have a ruling out 8 there. That's problematic when you're talking 9 about making sure you get the bundle of sticks, 10 making sure you get the title insurance. 11 Excuse me. Title insurance. So all we're 12 arguing is covering bases. And as Sean 13 eloquently put it, we're just trying to figure 14 out how to make that work. 15 And I believe this is the easiest way to 16 do it. And I believe it's consistent with the 17 regulatory goal here. It's just that the 18 statute could not have anticipated all of the 19 possible circumstances that could have 20 occurred, and we've seen that, frankly, 21 repeatedly in this matter. And what we're 22 asking for is just to bridge that gap. 23 CHAIR KASSEKERT: Okay. 24 COMMISSIONER SOMMELING: One of the 25 other unknowns about -- 93 ITEM NO. 13 1 CHAIR KASSEKERT: Commissioner 2 Sommeling? 3 COMMISSIONER SOMMELING: -- about the 4 Conservator continuing in order to make the 5 transaction whole so the licensing can remain 6 in place -- I mean, how long can that actually 7 go on if there's any wrinkles in the process? 8 MR. BROOKS: Well, what we're hoping, 9 Commissioner Sommeling, is that the 10 conservatorship will continue but once -- we 11 believe we'll find someone who's -- the 12 Commission will qualify and say, okay, that 13 person can act in that capacity. I would 14 suspect that when we come to the Commission and 15 request for that relief, we'll be asking for 16 the same person to be the ICA trustee. We need 17 an ICA trustee in order to do the interram 18 authorization process. It would seem to me 19 that would be the easiest way to do this. And 20 we have a conservatorship in case something 21 goes wrong and in order for the Tropicana to 22 continue to operate. 23 Once we get the plenary, once the 24 Commission is in -- the Division is in a 25 position to report, complete its investigation, 94 ITEM NO. 13 1 which is a little unusual in this case, also, 2 because a lot of work has already been done in 3 that regard. But once we get that plenary, 4 then we won't need the conservatorship anymore. 5 And at that point when the ICA Trustee goes 6 away, I assume the conservatorship will go away 7 as well. So I think -- 8 COMMISSIONER SOMMELING: Time frame, do 9 you have a imaginary time fram? 10 MR. BROOKS: Statutorily we're talking 11 nines months with the ability to extend it for 12 three. 13 CHAIR KASSEKERT: Yeah. Right. 14 MR. BROOKS: But I would say it would be 15 a function of when the Division completes its 16 report. And, again, in this particular case 17 here, we're kind of blessed in a way because 18 the predominate lender is Icahn. They're fully 19 vetted, fully involved in the process, and have 20 been investigated in this jurisdiction before. 21 Tropicana Entertainment was making the effort 22 before we really got to that this point, so a 23 lot of submissions have been made by Tropicana 24 Entertainment, and some of those key folks are 25 prior qualifiers or were key qualifiers in this 95 ITEM NO. 13 1 jurisdiction. So we're okay there. 2 I can't -- you know, I don't know. I 3 guess it would be a function of when the 4 Division can complete its investigation. 5 Hopefully sooner rather than later. 6 Statutorily we know we have the nine-month 7 window with the ability to extend for three. 8 But I think, I would guess that we would be in 9 sooner than that. 10 (Conferring.) 11 COMMISSIONER SOMMELING: Nothing further 12 from me, Madame Chair. 13 CHAIR KASSEKERT: Thank you. 14 Why don't we do this? Let me at least 15 give opportunity to counsel that if there is 16 any additional arguments you want to make, and 17 I'll ask Mr. Giacomo -- Gia -- I'll ask Len -- 18 (Laughter.) 19 MR. DiGIACOMO: Present. 20 CHAIR KASSEKERT: -- to oversee that 21 process so that if there are additional 22 submissions that we should consider, you know, 23 prior to our ruling, we will certainly 24 entertain those. Because I think this is such 25 a unique issue, as has the whole Tropicana 96 ITEM NO. 13 1 proceeding, frankly, been a unique issue. You 2 know -- I want to have the benefit of all those 3 arguments. And Mr. Adams, I'd like to have the 4 benefit of your response if Mr. Brooks files, 5 you know, a posthearing submission. 6 And, accordingly, unless my colleagues 7 and the Commission are prepared to make a 8 motion to decide the matter now, which I don't 9 think that's the case, as Chair, I would simply 10 close this item for today with the expectation 11 of returning with a ruling at the first 12 convenient opportunity and pending any 13 additional submissions. 14 So thank you very much. 15 MR. BROOKS: Thank you, Madame Chair, 16 and thank you, members. 17 CHAIR KASSEKERT: Thank you. 18 MR. ADAMS: Thank you. 19 MR. NANCE: In accordance with 20 Resolution No. 08-12-10-22, the next closed 21 session of the Commission shall be held on 22 Wednesday, December 2nd, 2009, at 9:15 a.m. in 23 the Commission offices. 24 It is now time for the public 25 participation portion of the meeting. 97 1 CHAIR KASSEKERT: Is there anyone from 2 the public that wishes to be heard? 3 (No response.) 4 CHAIR KASSEKERT: Seeing no one, I'll 5 declare this portion of the meeting closed and 6 entertain a motion to adjourn. 7 COMMISSIONER SOMMELING: Motion to 8 adjourn. 9 CHAIR KASSEKERT: Is there a second? 10 VICE CHAIR EPPS: Second. 11 CHAIR KASSEKERT: The motion has been 12 made and seconded. All in favor? 13 (Ayes.) 14 CHAIR KASSEKERT: Opposed? 15 (No response.) 16 CHAIR KASSEKERT: Motion carries. 17 Thank you. 18 (Public Meeting 09-11-12 was adjourned 19 at 12:05 p.m.) 20 21 22 23 24 25 98 1 2 C E R T I F I C A T E 3 4 5 I, DARLENE SILLITOE, a Certified Court 6 Reporter and Notary Public of the State of New 7 Jersey, certify that the foregoing is a true 8 and accurate transcript of the proceedings. 9 10 11 I further certify that I am neither 12 attorney, of counsel for, nor related to or 13 employed by any of the parties to the action; 14 further that I am not a relative or employee of 15 any attorney or counsel employed in this case; 16 nor am I financially interested in the action. 17 18 19 DARLENE SILLITOE CCR 20 License No XI01023 21 22 Dated: November 14, 2009 23 My Notary Commission Expires July 22, 2014 24 ID No 2062871 25