On April 20, U.S. Bankruptcy Court Judge Gloria Burns ruled that Straub, who paid $82 million for the property, has the right to seek new tenants or renegotiate with the former tenants, which include nightclubs and restaurants, according to The Associated Press.
“What happened was a fairly routine thing that happens in a lot of bankruptcy cases: The debtors rejected the term of the lease, meaning the debtor no longer has to abide to the terms of the lease,” a source with knowledge of the case told Philadelphia Business Journal.
Tenant rights
Regardless, Judge Burns stated previously that the expected purchaser would have to respect Section 365(h) of the bankruptcy code, which says that tenants may keep their rights to possession, Philadelphia Business Journal reported.
Straub’s lawyer has stated that his client is interested in working with former tenants instead of new ones, according to the AP.
“I don’t think he’s looking for a complete new set of tenants,” the attorney told the news source. “He’s looking for reasonable lease adjustments.”
Garces group
The Garces Group – a former tenant which previously had four restaurants in Revel – is in discussion with Straub, chief development officer Rob Keddie told Philadelphia Business Journal. Last September, he stated that once Revel reopened, he wanted his company to do business in the new property.
“We still see Atlantic City as an incredibly important market for us, so we continue to be in discussion with Polo North regarding our operations there,” Keddie told the media outlet.
Further challenges
Even though Straub’s plans have moved forward one step as a result of him receiving a court ruling that he has the right to cancel existing leases, the Florida developer is facing other challenges in his plans for the property.
The Revel hotel and casino has been without power since April 9, after ACR Energy Partners – the main power supplier for the property – was unable to come to an agreement with the new owner, according to the AP.
Revel also lacks water, and the fire department emphasized in February that any efforts to fight fires at the facility will be very hard to pull off as long as this situation is not remedied, the media outlet reported.
Wells Fargo, which has helped provide financing during the bankruptcy, has offered to provide $300,000 to grant Revel power for two weeks, but lawyers for both ACR and Straub indicated that the two sides have not made any decision on the matter, according to the news source. Amid the current situation, Atlantic City has been fining Straub $5,000 a day because the lack of power breaches fire safety codes.
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