When it was first put up for sale in Dec. 2007, the casino was expected to fetch at least $1 billion. But the plunging economy derailed those plans.
Retired state Supreme Court Justice Gary Stein, who has been overseeing the casino as conservator, said there is no guarantee it will sell for more than $200 million.
"I can't be confident, because this is the most unusual economy the casino industry has ever seen," he said. Asked what sort of bargain the Tropicana would be at such a steep discount, Stein would only say, "It's a very propitious time to buy."
The state Casino Control Commission voted Wednesday to permit Stein to file for bankruptcy, which he did soon after.
The auction itself could happen by mid-June. Commission Chairwoman Linda Kassekert said a sale could be closed by the end of the year.
The low-ball $200 million offer is the kind of bid that has worked before for Icahn. He bought the Sands from bankruptcy for $65 million in 2000 and sold it six years later to Pinnacle Entertainment Inc. for $270 million.
The Tropicana will be sold under a section of the federal bankruptcy code that is designed to eliminate liens against the casino and give clear title to the purchaser.
The Icahn group was selected as the so-called "stalking horse." That means it made an initial bid of $200 million that sets the minimum price for the Tropicana. If no one else bids, the Icahn group gets the Tropicana.
But at least one other party remains interested. The Baltimore-based Cordish Company was once in line to act as a stalking horse for the property, and last year had offered $700 million in cash and stock, or $575 million in an all-cash deal.
But it withdrew that bid amid the nationwide economic downturn. Company chairman David Cordish says he is still interested in bidding on the Tropicana, particularly given the low starting price.
The casino-hotel will remain open as usual during the bankruptcy process.
"I can assure everyone that our casino will continue to offer the very finest service, and that there will be no negative impact on our employees," said Tropicana President Mark Giannantonio. "We're looking forward to emerging with a new owner."
The Tropicana's former owner, a subsidiary of Kentucky-based Columbia Sussex Corp., was stripped of its casino license in Dec. 2007 after owning it for less than a year. It had laid off nearly 1,000 workers, leading to filthy hotel rooms, problems with service and poor compliance with state casino regulations.
Interim management has since corrected those problems.
The loss of the casino license mandated that the Tropicana be sold. The process - originally expected to be completed a year ago - has been complicated by the recession and efforts by Tropicana Entertainment LLC to regain control of the casino through the courts. New Jersey's Supreme Court denied their appeal of the license revocation in November.
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