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IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF DELAWARE
Chapter 11
Case No. 1412103 (KG)

In re:
TRUMP ENTERTAINMENT RESORTS,
INC., et al.,

(Jointly Administered)
Hearing Date: January 6, 2015, at 10:00 a.m.
Related Docket No. 638

Debtors.

LIMITED OBJECTION AND RESERVATION OF RIGHTS OF DJT

AEROSPACE LLC WITH RESPECT TO THE DEBTORS SECOND MOTION
FOR ENTRY OF AN ORDER, PURSUANT TO SECTIONS 105(a), 365(a) AND
554(a) OF THE BANKRUPTCY CODE, AUTHORIZING THE DEBTORS TO
REJECT CERTAIN EXECUTORY CONTRACTS AND UNEXPIRED LEASES,
NUNC PRO TUNC TO THE REJECTION EFFECTIVE DATE
DJT Aerospace LLC (DJT Aerospace), by and through its undersigned counsel,
hereby files this Limited Objection and Reservation of Rights (the Limited Objection) with
respect to the Debtors Second Motion for Entry of an Order, Pursuant to Sections 105(a),
365(a) and 554(a) of the Bankruptcy Code, Authorizing the Debtors to Reject Certain Executory
Contracts and Unexpired Leases, Nunc Pro Tunc to the Rejection Effective Date [D.I. 638] (the
Motion) 1 and respectfully states:
PRELIMINARY STATEMENT
1.

DJT Aerospace is the counterparty to the Helicopter Lease with the Debtors. It

does not object to the ultimate rejection of the Helicopter Lease. It does, however, object to the
rejection being granted nunc pro tunc and to the effectiveness of any rejection until, at a
minimum, the Debtors satisfy all obligations due on account of the hangar space at Teterboro
Airport (where the Debtors store and maintain the Helicopter) to Jet Aviation Teterboro, L.P.

Capitalized terms not otherwise defined herein shall be given the meanings ascribed to them in the

Motion.

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(Jet Aviation), i.e., with respect to the so-called Rejected Real Property Lease (hereinafter,
the Hangar Lease). Without payment of those amounts to Jet Aviation, DJT Aerospace will
likely be precluded from retrieving the Helicopter, as Jet Aviation has (or likely can) assert a
possessory lien, enforceable against DJT Aerospace (and its secured creditors), for all amounts
that remain unpaid in accordance with N.J.S.A. 2A:44-1, et seq. and detain such aircraft at any
time it is lawfully in [its] possession until such sum is paid.
2.

Indeed, Jet Aviation has advised DJT Aerospace that it will insist upon full

payment of the obligations due to it before it will release the Helicopter to DJT Aerospace. Nunc
pro tunc relief is an equitable remedy that should not be granted here as the Debtors have not
and cannot effectively surrender the Helicopter to DJT Aerospace and fault for that failure
indisputably rests with the Debtors. Thus, to the extent the Court grants the Motion with respect
to the Helicopter Lease, it should be clear that the rejection thereof will not be effective until all
amounts due to Jet Aviation are in fact paid so that DJT Aerospace can obtain possession of its
property without the imposition of any lien. Any other relief would be inequitable.
3.

Finally, DJT Aerospace respectfully requests that the proposed form of order

provide that upon rejection of the Helicopter Lease, DJT Aerospace shall be entitled to apply its
security deposit to the Debtors obligations under the Helicopter Lease, and that the automatic
stay shall be lifted to the extent necessary to permit such setoff.
RELEVANT BACKGROUND
4.

Trump Entertainment Resorts Holdings, L.P. and DJT Aerospace are parties to an

Equipment Lease Agreement, dated as of December 1, 2010 (as amended, modified or

supplemented from time to time, the Helicopter Lease) whereby the Debtors lease the

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Helicopter from DJT Aerospace. 2 As is apparent from the Motion, the Debtors store and
maintain the Helicopter at a hangar at Teterboro Airport located in Teterboro, New Jersey
pursuant to the terms of the Hangar Lease with Jet Aviation.
5.

Upon information and belief, the monthly obligations under the Hangar Lease

total $13,665.88. According to Jet Aviation, the Debtors have failed to pay Jet Aviation with
respect to the Hangar Lease since July 2014, including each month during which the Debtors
have operated under Chapter 11. 3
6.

N.J.S.A. 2A:44-1 et seq. grants a possessory lien, enforceable against DJT

Aerospace, for sums due for the storage, maintenance, keeping or repair of aircraft 4 or the
furnishing of gasoline, accessories, materials and supplies therefor, in favor of persons engaged
in the business of supplying such goods or services. N.J.S.A. 2A:44-2. 5 The lien shall be
2

The Helicopter Lease is attached to DJT Aerospaces proof of claim filed in this case. See Claim # 716;
Electronic Proof of Claim - 2596.
3

The Debtors failure to pay the obligations under the Hangar Lease (and to DJT Aerospace) calls into
question the veracity of the information contained in the Debtors sworn operating reports and whether the Debtors
are or will be administratively insolvent. For example, the Debtors latest operating report reflects that TER
Holdings is current on its post-petition accounts payable (with $1,000 due within the period from 0-30 days and $0
due for the period 31-60 days). Yet, that is obviously inaccurate as the Debtors have failed to pay post-petition
obligations under the Hangar Lease (which are at least $55,000 for the post-petition period) and to DJT Aerospace
(which are no less than $130,000, comprised of base rent for September 2014 through December 2014 ($32,500 * 4
months)). The Debtors should not be permitted to enjoy the benefits of bankruptcy without meeting their burdens,
including the timely payment of administrative expenses. Indeed, this is not the only administrative obligations that
the Debtors have ignored. For example, the Debtors have also failed to pay post-petition administrative real estate
taxes regarding to the driveway property at the Plaza, which the Debtors are directly responsible for under a ground
lease with R&R Associates (under which Donald J. Trump is also personally liable). The Debtors non-payment
relating to 3rd and 4th quarter taxes has resulted in the landlord demanding that Mr. Trump pay those amounts
personally.
4

The Helicopter is an aircraft within the meaning of the statute. N.J.S.A. defines aircraft as follows:
Aircraft means any contrivance invented, used or designed for navigation or flight in the air except a parachute or
other contrivance designed for such navigation but used primarily as safety equipment. N.J.S.A. 2A:44-1.
Similarly, it is believed that Jet Aviation would be a hangar operator under the statute, which means any person
operating a hangar according to regulations of the United States department of commerce and the laws of the state of
New Jersey. Id.
5

2A:44-2, provides as follows:

Right of lien; detention; priorities; statement verified by oath

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superior to all other liens, except liens for taxes, and the operator of such aircraft shall be deemed
the agent of any owner, mortgagee, conditional vendor or other lienor thereof for the creation of
such superior lien. Id.
7.

By failing to pay the amounts due Jet Aviation, the Debtors have created a

possessory lien in favor of Jet Aviation that would, upon information and belief, permit Jet
Aviation to detain the Helicopter until all such payments are received. Indeed, even if Jet
Aviation were to allow the Helicopter to be removed by DJT Aerospace, it is possible that Jet
Aviation could continue to assert its lien and later seize the Helicopter. See 2A:44-3. 6
8.

Without paying all amounts due Jet Aviation, the Debtors cannot effectively

surrender the Helicopter to DJT Aerospace, and would deprive DJT of its property.
Respectfully, therefore, this Court should condition the rejection of the Helicopter Lease on the
payment of all amounts due under the Hangar Lease.
a. Any person, engaged in the business of operating an airport, a hangar or place for the storage,
maintenance, keeping or repairing of aircraft who, in connection therewith, permits landings or take-offs or stores,
maintains, keeps or repairs any aircraft or furnishes gasoline, accessories, materials or other supplies therefor at the
request or with the consent of the owner or his representative, agent or lessee, whether such owner be a conditional
vendee or a mortgagor remaining in possession or otherwise, shall have a lien upon such aircraft or any part thereof
for the sum due as the fees for such landings or take-offs, or for such storing, maintaining, keeping or repairing of
such aircraft or for furnishing gasoline, accessories, materials or other supplies therefor, and may, without process of
law, detain such aircraft at any time it is lawfully in his possession until such sum is paid.
The lien shall be superior to all other liens, except liens for taxes, and the operator of such aircraft shall be
deemed the agent of any owner, mortgagee, conditional vendor or other lienor thereof for the creation of such
superior lien.
b. Any person entitled to a lien pursuant to subsection a. shall, within 90 days after the date upon which
work was last performed or material last furnished in performing such work or making such repairs or
improvements, or fees were last incurred for landings or take-offs, file in the office of the county recording officer of
the county in which the aircraft is based, or where the work was performed or material supplied, or landing and takeoff fees incurred, a statement verified by oath. The statement shall include the name of the person entitled to the lien,
the name of the owner of the aircraft, a description of the aircraft, the amount for which a lien is claimed, and the
date upon which the work was completed, materials supplied or fees incurred.
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2A:44-3 provides as follows: Removal of aircraft; seizure; costs of seizure. A person acquiring a lien
under section 2A:44-2 of this title shall not lose the same by reason of allowing the aircraft, or part thereof, to be
removed from his control, and if so removed, he may, after demand of payment of claim either personally or by
registered mail if the owner's address is known, and without further process of law, seize without force and in a
peaceable manner, the aircraft or part thereof, wherever found in this state.

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LIMITED OBJECTION AND RESERVATION OF RIGHTS

A.

The Court Should Deny Retroactive Rejection of the Helicopter Lease

9.

In general, an executory contract is deemed rejected as of the date of the order of

the court authorizing rejection. In re Fleming Cos., Inc., 304 B.R. 85, 96 (Bankr. D. Del. 2003).
A bankruptcy court can authorize retroactive relief, deeming the contract rejected at an earlier
date, only in certain circumstances. Id. Such relief is an exercise of the courts equitable
powers and is, thus, only appropriate when the balance of equities calls for an earlier rejection
date. In re TW, Inc., No. 03-10785, 2004 WL 115521, at *2 (D. Del. Jan. 14, 2004) (affirming
the bankruptcy courts refusal to grant retroactive rejection).
10.

In fact, courts in this District will generally refuse to authorize retroactive

application of a rejection order, regardless of equities, prior to the date on which the property in
question is duly surrendered to the counterparty. See, e.g., Fleming, 304 B.R. at 96 (Rejection
has been allowed nunc pro tunc to the date the Motion is filed or the premises is surrendered,
whichever is later, only in certain circumstances.) (emphasis added); see also TW, 2004 WL
115521 (retroactive application of rejection order denied when debtor did not properly surrender
premises); In re Chi-Chis, Inc., 305 B.R. 396, 399 (Bankr. D. Del. 2004) (affirming bankruptcy
courts refusal to grant retroactive rejection as of the petition date, and instead allowing rejection
as of the date debtor surrendered possession of the premises to its landlords); New Valley Corp.
v. Corp. Prop. Assocs. (In re New Valley Corp.), No. 98-982, 2000 WL 1251858, at *15-16
(D.N.J. Aug. 31, 2000) (allowing rejection as of the date the landlord was known to be in full
control of the premises, preparing it for a new tenant).
11.

As Judge Robinson stated in TW:

An order granting relief nunc pro tunc is not a remedy that should
be given as a matter of course, but only after a balancing of the
equities in a particular case. It is the burden of the moving party to
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show that relief, of this character, is appropriate. In the present

case, the bankruptcy court placed emphasis on the fact that
possession of the Premises was not properly surrendered and that
fault, in this regard, indisputably rested with the debtor. Unlike
circumstances where possession has been surrendered prior to the
petition date, a landlord without actual possession may face a
greater risk and greater uncertainty as to whether the lease will
ultimately be rejected. Consequently, the court concluded that
debtor-appellant failed to demonstrate that it was entitled to
retroactive relief.
TW, 2004 WL 115521 at *2 (affirming Judge Walraths and determining that decision to deny
the debtors request for retroactive relief did not constitute an abuse of its discretion).
12.

Here, the Debtors have failed to meet their burden of demonstrating that

retroactive application of the effective date of the rejection is appropriate under these factual
circumstances. Indeed, since the Debtors have not effectively surrendered the Helicopter to DJT
Aerospace free and clear of the potential lien of Jet Aviation, the rejection of the Helicopter
Lease should not be granted retroactively and, in fact, should not be granted until such time as
the Helicopter is effectively surrendered to DJT Aerospace free and clear of that lien (which
requires payment of all amounts due, including those due for the pre-Petition Date period).
13.

Moreover, if the Court were to allow such nunc pro tunc treatment, it might

vitiate the argument of DJT Aerospace for an administrative expense during a period in which
DJT Aerospace is being deprived of its property (solely as a result of the Debtors failures).
Accordingly, DJT Aerospace respectfully asks this Court not grant such nunc pro tunc relief or
in fact any relief until such time as all amounts due Jet Aviation have been paid.
B.

The Court Should Permit DJT Aerospace to Apply its Security Deposit
14.

As noted above, the Debtors have failed to pay DJT Aerospace the obligations

due under the Helicopter Lease. This includes amounts due with respect to both the pre-Petition
Date period and the post-Petition Date period. On November 24, 2014, DJT Aerospace timely

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filed a proof of claim in this matter, asserting a claim for $46,165.68. 7 See Claim # 716;
Electronic Proof of Claim - 2596. The Debtors have also incurred liability under the
Helicopter Lease since the Petition Date in an amount of no less than $130,000 ($32,000 base
rent * 4 months), and such amounts continue to accrue, for which DJT Aerospace intends to file
an administrative expense claim. 8
15.

DJT Aerospace is holding a security deposit of $65,000. To the extent the Court

grants the rejection of the Helicopter Lease, DJT Aerospace respectfully requests that such relief
be conditioned upon the right of DJT Aerospace, in accordance with sections 362 and 553 of the
Bankruptcy Code, to apply the security deposit to its claims (to be applied first to its pre-Petition
Date claims, including its rejection damage claims, and then, to the extent available, to its
administrative claims).
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

The amount asserted in the proof of claim includes amounts due Jet Aviation for August 2014, totaling
$13,665.68, to the extent DJT Aerospace is required to pay it to obtain a release of the Helicopter.
8

Nothing herein is intended to waive any rights or claims of DJT Aerospace, whether against the Debtors,
their estates or Jet Aviation, all of which are expressly preserved, or constitute an admission with respect to any
future matters with respect to Jet Aviation.

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CONCLUSION
WHEREFORE, for the reasons stated above, DJT Aerospace respectfully requests that
the Motion only be granted on condition that the Debtors pay all amounts due Jet Aviation under
the Hangar Lease, including any amounts due for periods preceding the Petition Date and that the
rejection of Helicopter Lease will not be effective until such payment. Moreover, to the extent
the Helicopter Lease is rejected, DJT Aerospace requests, if necessary, that the Court modify the
automatic stay to allow it to exercise its offset/recoupment right as to the amount of its security
deposit, and that the Court grant such other relief as the Court deems just and proper.
Dated: December 30, 2014
Respectfully submitted,
COLE, SCHOTZ, MEISEL,
FORMAN & LEONARD, P.A.
By: /s/ Patrick J. Reilley
Patrick J. Reilley (No. 4451)
500 Delaware Avenue, Suite 1410
Wilmington, DE 19801
Telephone: (302) 652-3131
Facsimile: (302) 652-3117
preilley@coleschotz.com
- and
Michael D. Sirota (admitted pro hac vice)
David M. Bass (admitted pro hac vice)
25 Main Street
Hackensack, NJ 07601
Telephone: (201) 489-3000
Facsimile: (201) 489-1536
Counsel for DJT Aerospace LLC

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