Joel R. Glucksman
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NJ Bankruptcy Court Approves Atlantic City Casino Liquidation
Author: Joel R. Glucksman
Date: July 15, 2015
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Last week, the U.S. Bankruptcy Court in Trenton, N.J. approved the casino liquidation plan for Revel AC Inc. in Atlantic City.
The ruling resolves Revel’s long Chapter 11 case with a proposal that permits the casino to repay $45 million in debt for roughly $5 million.
Revel’s long Chapter 11 case
The long Chapter 11 process for the Revel casino finally ended after settlements were reached with creditors. Since its opening in 2012, the twice-bankrupt casino failed to turn a profit, ultimately leading to its Chapter 11 filing for bankruptcy protection in June 2014. In the plan, the $2.4 billion casino will be sold for $82 million to Polo North Country Club Inc. owned by real estate developer Glenn Straub, with the proceeds from the sale set to repay creditors.
Settlement allows Revel to resolve negotiations
This settlement followed several months of contentious negotiations involving Revel, Straub and ACR Energy Partners LLC, the operator of its custom-built power plant. ACR Energy argued that previous proposals submitted by Revel were “patently unconfirmable” as the casino did not have the financial resources to cover its entire claim.
As part of the new agreement, ACR Energy will now receive $3.3 million of the $20 million debt owed by Revel. Negotiations with ACR Energy were contentious due to the fact that Revel owed the company over $20 million in utility services, prompting ACR to seek to have the Chapter 11 bankruptcy converted to Chapter 7 liquidation, which would have stripped Revel of control over its case.
The plan also calls for Revel to allocate $1.1 million for unsecured creditors, $10 million for J.P. Morgan Chase & Co. to repay a portion of the $13.5 million in unpaid legal fees, and another $7 million to pay down future administrative expenses related to the closing of the case.
The casino’s primary lender, Wells Fargo, is owed approximately $150 million, but is set to receive the remaining proceeds of the $82 million sale, along with several million dollars in the casino’s reserve. The deal will additionally call for the state of New Jersey to receive $1.65 million from the closing cost budget to settle its $20 million claim for unpaid corporate business taxes.
The ramifications
According to Trenton Bankruptcy Court Judge Michael Kaplan, the goal of the settlement is to spur the revival of Atlantic City as a destination. The property has been empty since June 2014, and therefore needed to be “buried”, noted Kaplan.
Are you a creditor in a bankruptcy? Have you been sued by a bankrupt? If you have any questions about your rights, please contact me, Joel Glucksman, at 201-806-3364.
- Practices: Bankruptcy & Creditors' Rights, Corporate Transactions & Business, Bankruptcy Litigation
- Locations: Red Bank, NJ, New York City, Little Falls, NJ
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