Scarinci Hollenbeck, LLC, LLCScarinci Hollenbeck, LLC, LLC

Firm Insights

Errors Causing Revel Casino's Downfall Brought To Light

Author: Joel R. Glucksman

Date: May 11, 2015

Key Contacts

Back

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.

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Scarinci Hollenbeck, LLC, LLC

Related Posts

See all
Dissolving Your Business: Essential Legal Steps to Protect Your Interests post image

Dissolving Your Business: Essential Legal Steps to Protect Your Interests

If you’re considering closing your business, it’s crucial to understand that simply shutting your doors does not end your legal obligations. Unless you formally dissolve your business, it continues to exist in the eyes of the law—leaving you exposed to ongoing liabilities such as taxes, compliance violations, and potential lawsuits. Dissolving a business can seem […]

Author: Christopher D. Warren

Link to post with title - "Dissolving Your Business: Essential Legal Steps to Protect Your Interests"
The Role of Corporate Restructuring in Mergers & Acquisitions post image

The Role of Corporate Restructuring in Mergers & Acquisitions

Contrary to what many people think, corporate restructuring isn’t all doom and gloom. Revamping a company’s organizational structure, corporate hierarchy, or operations procedures can help keep your business competitive. This is particularly true during challenging times. Corporate restructuring plays a critical role in modern business strategy. It helps companies adapt quickly to market changes. Following […]

Author: Dan Brecher

Link to post with title - "The Role of Corporate Restructuring in Mergers & Acquisitions"
Crypto Enforcement: A Former Prosecutor’s Warning to Criminals and the Public post image

Crypto Enforcement: A Former Prosecutor’s Warning to Criminals and the Public

Cryptocurrency intimidates most people. The reason is straightforward. People fear what they do not understand. When confusion sets in, the common reaction is either to ignore the subject entirely or to mistrust it. For years, that is exactly how most of the public and even many in law enforcement treated cryptocurrency. However, such apprehension changed […]

Author: Bryce S. Robins

Link to post with title - "Crypto Enforcement: A Former Prosecutor’s Warning to Criminals and the Public"
Understanding Chattel Paper: A Key Component in Secured Transactions post image

Understanding Chattel Paper: A Key Component in Secured Transactions

Using chattel paper to obtain a security interest in personal property is a powerful tool. It can ensure lenders have a legal claim on collateral ranging from inventory to intellectual property. To reduce risk and protect your legal rights, businesses and lenders should understand the legal framework. This framework governs the creation, sale, and enforcement […]

Author: Dan Brecher

Link to post with title - "Understanding Chattel Paper: A Key Component in Secured Transactions"
Crypto Compliance: A Comprehensive Guide post image

Crypto Compliance: A Comprehensive Guide

For years, digital assets operated in a legal gray area, a frontier where innovation outpaced the reach of regulators and law enforcement. In this early “Wild West” phase of finance, crypto startups thrived under minimal oversight. That era, however, is coming to an end. The importance of crypto compliance has become paramount as cryptocurrency has […]

Author: Bryce S. Robins

Link to post with title - "Crypto Compliance: A Comprehensive Guide"
Supreme Court and Title VII: Implications for Reverse Discrimination post image

Supreme Court and Title VII: Implications for Reverse Discrimination

Earlier this month, the U.S. Supreme Court issued a decision in Ames v. Ohio Department of Youth Services vitiating the so-called “background circumstances” test required by half of federal circuit courts.1 The background circumstances test required majority group plaintiffs pleading discrimination under Title VII of the Civil Rights Act to meet a heightened pleading standard […]

Author: Matthew F. Mimnaugh

Link to post with title - "Supreme Court and Title VII: Implications for Reverse Discrimination"

No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.

Sign up to get the latest from our attorneys!

Explore What Matters Most to You.

Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.

Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.

Let`s get in touch!

* The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!