Joel R. Glucksman
Partner
201-896-7095 jglucksman@sh-law.comFirm Insights
Atlantic Club Casino Seeks Bankruptcy Protection
Author: Joel R. Glucksman
Date: November 21, 2013
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The Atlantic Club Casino Hotel recently announced that it has filed for protection under Chapter 11 of the bankruptcy law, and that it plans to seek bids from potential buyers over the coming weeks.
The company, which filed bankruptcy proceedings in the U.S. Bankruptcy Court in Camden, N.J., hopes to be sold at a bankruptcy auction by mid-December. U.S. Bankruptcy Judge Gloria Burns has already approved a schedule under which the court would hear bids from prospective buyers by Nov. 18, and the casino will maintain normal operations during these proceedings, according to The Associated Press.
However, the casino did note that it does not currently have the cash flow to continue operations for a significant period of time, and it listed liabilities of between $10 million to $50 million. The Wall Street Journal reported that an unconfirmed amount of pension liabilities also tops the list of debts the casino is facing.
The Atlantic Club Casino Hotel is only one in a string of New Jersey casinos that are experiencing financial struggles and bankruptcy. The AP noted that roughly half of Atlantic City’s 12 casinos have sought bankruptcy protection over the last six years, despite many of them offering low-priced gambling and food options. Michael Frawley, the casino’s chief operating officer, said that the strategy of offering “value-centric” services was initially working, but has simply not produced financial results quickly enough.
“Unfortunately, the market has taken longer to rebound than we had hoped,” Frawley told the AP.
The failure of the market to rebound is also threatening the solvency of other Atlantic City casinos, with Revel Casino Hotel recently announcing its plans to seek “strategic alternatives” only six months after emerging from bankruptcy protection. Although the company has not yet made an announcement on the course of action it plans to take, analysts say that putting the company up for sale or returning to bankruptcy court are not far-fetched options.
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