NEW YORK -- Real estate developer Donald Trump filed a pre- packaged bankruptcy plan for the Plaza Hotel in a deal that will give his bank lenders a 49 percent stake in the legendary Manhattan landmark, a court clerk said Wednesday.
Trump's Plaza Operating Partners Ltd. filed the Chapter 11 bankruptcy petition in U.S. Bankruptcy Court in Manhattan Nov. 2, according to the court clerk's office.
No hearing has been set on the bankruptcy case, which will be heard by Bankruptcy Judge Prudence Abram, but the Plaza hotel is not likely to remain in Chapter 11 very long since Trump has reached an accord with his lenders.
The filing was widely expected following a tentative agreement between Trump, who purchased the New York hotel for $390 million in 1988, and his bank lenders in March as part of his efforts to reduce his debt.
Sources familiar with the case said Trump and his lenders have agreed on a total restructuring of the Plaza's debt, estimated at $550 million on three mortgages.
Trump agreed to give up a 49 percent stake in the hotel in return for the restructuring package, they said. Trump would retain 51 percent and continue to operate the Plaza.
Trump, who took on heavy debt in the 1980s to purchase overpriced properties that lost some of their value when the boom collapsed, has been swapping debt for equity in his real estate holdings for 2 years to shore up his empire.
A banking syndicate, led by Citicorp, holds a $125 million second mortgage and a $125 million third mortgage. The first mortgage of $300 million is held by another Citicorp-led syndicate.
In return for Trump's 49 percent stake in the Plaza, the bank group agreed to forgive the $250 million in second and third mortgages and a $125 million personal guarantee from Trump on the second mortage.
The restructuring of the Plaza's debt includes an extension of the first mortgage maturity date plus a lower fixed interest rate that will replace a floating rate, sources said.
The agreement also grants Trump the right of first refusal to purchase his relinquished 49 percent interest if the bank lenders find a buyer.
Trump's former wife, Ivana, was president of the Plaza at one time for $1 a year and all the dresses she could buy, but Trump has remained chairman, a Trump spokeswoman said.
'This is the last leg of our restructuring with Mr. Trump,' said Amy Dates, a Citicorp spokeswoman. She said Citibank would not discuss the details of the restructuring agreement.
This is not the first time Trump has filed a pre-packaged bankruptcy plan.
On March 9, two of his Atlantic City casinos, the Trump Castle and Trump Plaza, filed pre-packaged bankruptcy plans in Bankruptcy Court in Camden, N.J., after winning bondholders' approval.
Trump's Taj Mahal, the newest and glitziest of his Atlantic City properties, emerged from Chapter 11 bankruptcy last year just weeks after the filing.