U.S. Bankruptcy Judge Gloria Burns recently refused to grant a request to sell Revel Casino made by advisors for the Atlantic City-based Casino and Hotel to Florida developer Glenn Straub for $82 million.
Instead, she said the parties involved need more time to see if they can get a better deal to sell Revel Casino. This latest failure to sell the closed-down property came after a series of attempted deals that also fell through. “I need to be convinced that it is the best deal the debtors can get,” Burns stated
on Wednesday, March 4, NJ.com reported. “I have a lot of questions but the big question that I have is this in the best interest and I can’t tell that yet.”
The company has generated no bids higher than $110 million
, compared to the $2.4 billion spent to open Revel Casino Hotel in 2012, according to Reuters.
“I think in order for me to be comfortable with this you need to satisfy me that every stone has been overturned to find the best deal,” Burns stated during a hearing in Camden, New Jersey, the media outlet reported.
The highest bid thus far came from Toronto-based Brookfield US Holdings LLC, which made an offer through an auction in October, according to NJ.com. However, Brookfield US later canceled the transaction, identifying challenges with the debt tied to the location’s power plant.
Polo North Country Club, which is owned by Straub, later bid $95.4 million for Revel Casino Hotel, the media outlet reported. However, the casino filed a motion to end the transaction, and in February, Burns approved this request. John Cunningham, attorney for the failed business, acknowledged last month, that he had absolutely no faith that Polo North would be capable of closing on the deal.
However, he changed his tune as a result of a new agreement whereby Polo North put $82 million into an escrow account, according to the news source. Now that Burns has denied this latest bid for the Revel Casino Hotel, the Los Angeles developer Izek Shomof is thinking about buying the facility.
During the hearing on March 4, Shomof’s lawyer, Leo Pustilnikov, stated that his client could pay a sum higher than the $82 million offered by Polo North, Reuters reported. He requested that Burns postpone making her decision on this bid.
In addition, Pustilnikov criticized the current sales process, maintaining that Straub had threatened to pursue legal action against Shomof for blocking the deal between Revel and Polo North, according to the news source.
Due diligence challenges
The attorney also mentioned the challenges his client faced when exploring a potential investment in the Revel Casino Hotel, the media outlet reported. More specifically, Pustilnikov stated that he and Shomof only had a brief period to tour the casino
before the hearing took place on Wednesday, according to The Associated Press.
Further, he maintained that up until recently, the two lacked sufficient information to consider a bid because they did not have key financial documents, the media outlet reported.
While Burns’ recent decision to postpone the $82 million deal might provide Shomof with the opportunity to make a bid of his own, various parties associated with the proceedings have voiced their concerns about delaying the deal, according to Reuters.
While Wells Fargo is currently financing the failed casino’s bankruptcy, a lawyer representing the lender
cautioned that Wells Fargo might pull its support if Burns pushed back against authorizing a deal with Straub, the media outlet reported. The federal judge replied to this concern by saying that switching to Chapter 7 bankruptcy from Chapter 11 might be the best approach.
Making this transition would be a bad move, stated Stuart Moskovitz, attorney for Straub, according to AP.
“You will devalue the estate so greatly by turning it into scrap.”