Bankruptcy Rules Don’t Trump Union Rights

Trump Entertainment Resorts, Inc. owns the Trump Taj Majal Hotel Casino in Atlantic City, New Jersey.  Like employers often do, Trump Entertainment Resorts filed for bankruptcy and sought to get out of its obligations to the Union that represents the Casino employees.  However, a recent decision from a bankruptcy court in Delaware shows that the employer can’t use bankruptcy rules to get everything it wants.

Generally, when a company files a bankruptcy petition, its creditors are required to stop all efforts to collect debts or any property of the “bankruptcy estate.”  This rule is referred to in bankruptcy law as the “automatic stay” on collection efforts.  Apparently, Trump Entertainment Resorts tried to use that rule to prohibit the Union from engaging in a lawful boycott.

According to the bankruptcy court, Trump Entertainment Resorts proposed major concessions during bargaining with the Union.  The Union responded with an effective, lawful campaign of contacting customers and encouraging them to take their business elsewhere.  Trump Entertainment Resorts then filed a motion in bankruptcy court asserting that the Union’s conduct was an act to “obtain possession” of part of the bankruptcy estate, and claiming that such activity by the Union is prohibited by bankruptcy laws.

In reviewing the parties’ arguments, the bankruptcy court balanced the Union’s rights to use economic weapons (such as a boycott) against the company’s interests under bankruptcy rules, and found in favor of the Union, determining instead that Trump Entertainment Resorts was seeking an “undue legal advantage.”

This decision serves as a small reminder of the Union’s power to organize, even when an employer files for bankruptcy.

By Xochitl Lopez | September 9, 2015

Legal Developments