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Steve Green
 

Tropicana in two courts to keep 'Tropicana' name free

22 July 2009

LAS VEGAS, Nevada -- The new owners of the Tropicana hotel-casino in Las Vegas moved Monday in two courts to assert their rights to use the "Tropicana" name without paying millions of dollars in licensing fees.

In a lawsuit in Clark County District Court, and a filing in U.S. Bankruptcy Court in Delaware, Tropicana Las Vegas said it was outrageous that it would have to pay a fee to use its own name.

The case has far-reaching implications, Tropicana Las Vegas lawyers said. They said the legal dispute could delay renovations and improvements planned for the Las Vegas property to be funded from a $75 million preferred stock offering.

"Some of the refurbishment and renovation may have to be put on hold if there are delays in establishing that the one and only Tropicana Las Vegas, established in 1957, can continue as the 'Tropicana Las Vegas'," Tropicana Las Vegas said in a bankruptcy court filing.

The dispute emerged in March when Onex Corp. of Toronto objected to a plan for the Tropicana name conceived by the executives managing the bankrupt Tropicana Entertainment LLC, which at that time controlled the Tropicana casinos in Las Vegas, Atlantic City and around the country.

Onex, as the main lender to the Las Vegas Tropicana, later teamed up with former MGM Mirage executive Alex Yemenidjian to take the Tropicana Las Vegas out of bankruptcy.

Under a plan for the Tropicana name revealed in March, the "OpCo" company to survive the bankruptcy would be granted exclusive ownership of the name "Tropicana" for casino services. The "OpCo" company controlled the Tropicana casinos outside of Las Vegas.

The Las Vegas company to be spun off out of the bankruptcy, called the "LandCo" company, would be required to pay $10 million for the rights to use the name over five years.

Now that Onex and Yemenidjian control Tropicana Las Vegas, the dispute over the Tropicana name is heating up and they're fighting to avoid the $2 million annual fee.

In court papers, the Las Vegas Tropicana said it was surprised to learn that the "OpCo" companies had recently created a professional logo saying "The Trop Las Vegas Est. 1957" and are seeking to trademark the phrase and logo.

The Las Vegas Tropicana said the timing of the registration, before Onex and Yemenidjian took over, means only one thing: "That the OpCo debtors are preparing an all out effort to strip Tropicana Las Vegas of the right to use the name Tropicana with respect to the Las Vegas casino and hotel that originated the name and operated under it for more than the last half century."

But the OpCo debtors say Onex is seeking a free ride by using a name that it doesn't have ownership to. The debtors' creditors -- mainly lenders to Tropicana casinos outside of Las Vegas -- say they obtained trademark rights to the name years ago as collateral for their loans.

They said the trademark rights were not used as collateral for loans Onex made to the Las Vegas Tropicana -- loans Onex later converted into its equity ownership stake.

"Onex wants a royalty-free license to use a trademark it does not own and has no continuing right to use," the OpCo creditors said in court papers.

But Tropicana Las Vegas said in court filings that the bankruptcy filing called for all LandCo assets to be transferred to the new Onex-controlled Las Vegas Tropicana -- and Tropicana Las Vegas says those assets include its name.

As part of the bankruptcy reorganization, the Tropicana Atlantic City is being sold to a group of investors led by Carl Icahn. They gained the property in exchange for $200 million worth of debt the group purchased at a heavy discount.