Judge denies Revel casino sale for $82M to Florida developer

AP News
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Posted: Mar 13, 2015 2:54 PM
Judge denies Revel casino sale for $82M to Florida developer

CAMDEN, N.J. (AP) — A bankruptcy judge on Friday denied the sale of Atlantic City's former Revel casino to a Florida developer.

That left the $2.4 billion property with no obvious buyer as the summer season approaches and its utility supplier threatens to cut off service to the building.

The decision increased the likelihood that the resort, once envisioned as a catalyst to help rejuvenate Atlantic City, may be foreclosed on by its lender, or have its parts sold off piecemeal in a liquidation.

At a hearing scheduled for Monday, Judge Gloria Burns will consider a request by Revel that she reconsider her order. She'll also hear requests from the casino's power plant to take the sale process out of Revel AC's hands and appoint a trustee to liquidate the property, and to enable it to stop providing utility service to the building.

In Friday's ruling, Burns said she lacks jurisdiction to approve the $82 million purchase by Glenn Straub's Polo North Country Club.

The judge said many aspects of the sale remain on appeal, and the changes made last month to the sale contract between Revel AC and Straub significantly changed the terms of the deal.

Burns said she is mindful "of the long and tortured history of this case" and the urgency of getting a sale approved in time for it to reopen for the crucial summer season. But after hours of research Thursday night and Friday morning, she determined she does not have legal jurisdiction to approve the sale right now.

Saying "we respectfully disagree," Revel attorney John Cunningham asked the judge to reconsider her ruling.

Adding to the time pressure in the case, lender Wells Fargo has said it will not indefinitely fund the bankruptcy case. That would leave foreclosure as an option.

The case is beset by appeals from former business tenants at the casino, including restaurants and nightclubs, as well as a power plant that is Revel's sole supplier of heat, hot water, air conditioning and electricity. A federal judge issued a partial stay in January of a sale order that Burns previously approved. That stay preserves the tenants' legal rights while the appeals are being heard.

The sale to Straub was due to close by March 31, but the judge's ruling now puts that in serious doubt. Representatives of Straub and Revel did not immediately respond to messages seeking comment on the ruling.

A loophole in the deal would have left the door open for Revel to accept a higher bid if one materializes before the March 31 scheduled closing date.

The previous contract between Revel and Straub was for $95.4 million, but that died when the deal did not close by the Feb. 9 deadline. Two weeks later, both sides agreed on a new deal for the reduced price of $82 million — all of which Straub has already put up in an escrow account.

Nineteen other would-be purchasers have expressed interest in Revel, but only Straub put any money up.

Revel closed in September after just over two years of operation during which it never turned a profit.

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Wayne Parry can be reached at http://twitter.com/WayneParryAC