Joel R. Glucksman
Partner
201-896-7095 jglucksman@sh-law.comErrors Causing Revel Casino’s Downfall Brought To Light
Author: Joel R. Glucksman|May 11, 2015
Revel AC, Inc. recently filed a disclosure statement that revealed a string of errors that fueled Revel Casino’s Downfall.
Errors Causing Revel Casino’s Downfall Brought To Light
Revel AC, Inc. recently filed a disclosure statement that revealed a string of errors that fueled Revel Casino’s Downfall.
Revel AC, Inc. recently filed a disclosure statement that revealed a string of errors that fueled Revel Casino’s Downfall.
The property, which cost $2.4 billion to build, has filed for bankruptcy twice before ultimately being sold for $82 million. Not only was this sale price a fraction of its initial cost, Revel never turned a profit as an operating business. This was one of many factors contributing to Revel Casino’s downfall.
Disclosure of missteps
Amid this situation, the old owners of the hotel and casino outlined the history of missteps that brought the property to its knees. The disclosure statement – which was filed in the U.S. Bankruptcy Court for the District of New Jersey – mainly cites the property’s first management team for this failure, according to The Associated Press.
The disclosure statement pointed out several problems, including expensive food and beverages, assuming too much debt and also difficulties with technology and marketing, the media outlet reported. However, one of the largest challenges identified by Revel’s previous owners was the decision to enter a contractual agreement with ACR Energy Partners whereby the energy provider would both construct and operate the hotel and casino’s power plant.
ACR power plant
Because Revel executives were unable to raise enough funds by themselves to construct a power plant, ACR Energy Partners supplied 75 percent of the financial resources needed to build the facility, according to the news source. In return, the hotel and casino agreed to receive its power, along with hot and cold water, from ACR Energy Partners for at least the next 20 years.
The relationship between Revel and the energy provider has long been a challenge, and the fallout of the agreement made years ago persists to this day, CasinoNewsDaily reported. Maintaining the power plant was costly, and one investor refused to finalize a deal to buy the hotel and casino because of this expense.
More specifically, the contract made between Revel and ACR Energy Partners ended up costing the hotel and casino $2 million every month on top of its energy costs, because Revel had to help pay off the debt it assumed to construct the power plant, according to the AP.
Service interruption
Florida developer Glenn Straub, who recently bought the hotel and casino, has thus far not come to any agreement to receive power from ACR Energy Partners, and the energy provider stopped supplying Revel with services, the media outlet reported.
The power plant was originally intended to help the hotel and casino avoid any power interruptions stemming from challenges with Atlantic City’s main power grid, and also reduce long-term utility costs, according to the news source. Currently, Straub is being fined $5,000 every day his property’s fire detection and suppression systems lack power.
While the previous owners were unable to leverage Revel to generate a profit, Straub has announced some ambitious plans, and has revealed that his decision to buy the hotel and casino is part of a $500 million plan intended to revitalize Atlantic City.
Errors Causing Revel Casino’s Downfall Brought To Light
Author: Joel R. Glucksman
Revel AC, Inc. recently filed a disclosure statement that revealed a string of errors that fueled Revel Casino’s Downfall.
The property, which cost $2.4 billion to build, has filed for bankruptcy twice before ultimately being sold for $82 million. Not only was this sale price a fraction of its initial cost, Revel never turned a profit as an operating business. This was one of many factors contributing to Revel Casino’s downfall.
Disclosure of missteps
Amid this situation, the old owners of the hotel and casino outlined the history of missteps that brought the property to its knees. The disclosure statement – which was filed in the U.S. Bankruptcy Court for the District of New Jersey – mainly cites the property’s first management team for this failure, according to The Associated Press.
The disclosure statement pointed out several problems, including expensive food and beverages, assuming too much debt and also difficulties with technology and marketing, the media outlet reported. However, one of the largest challenges identified by Revel’s previous owners was the decision to enter a contractual agreement with ACR Energy Partners whereby the energy provider would both construct and operate the hotel and casino’s power plant.
ACR power plant
Because Revel executives were unable to raise enough funds by themselves to construct a power plant, ACR Energy Partners supplied 75 percent of the financial resources needed to build the facility, according to the news source. In return, the hotel and casino agreed to receive its power, along with hot and cold water, from ACR Energy Partners for at least the next 20 years.
The relationship between Revel and the energy provider has long been a challenge, and the fallout of the agreement made years ago persists to this day, CasinoNewsDaily reported. Maintaining the power plant was costly, and one investor refused to finalize a deal to buy the hotel and casino because of this expense.
More specifically, the contract made between Revel and ACR Energy Partners ended up costing the hotel and casino $2 million every month on top of its energy costs, because Revel had to help pay off the debt it assumed to construct the power plant, according to the AP.
Service interruption
Florida developer Glenn Straub, who recently bought the hotel and casino, has thus far not come to any agreement to receive power from ACR Energy Partners, and the energy provider stopped supplying Revel with services, the media outlet reported.
The power plant was originally intended to help the hotel and casino avoid any power interruptions stemming from challenges with Atlantic City’s main power grid, and also reduce long-term utility costs, according to the news source. Currently, Straub is being fined $5,000 every day his property’s fire detection and suppression systems lack power.
While the previous owners were unable to leverage Revel to generate a profit, Straub has announced some ambitious plans, and has revealed that his decision to buy the hotel and casino is part of a $500 million plan intended to revitalize Atlantic City.
