Revel hearings postponed by request of parties in lawsuit

Revel hearings postponed by request of parties in lawsuit

The troubled company has repeatedly failed to negotiate a transaction after filing for Chapter 11 bankruptcy in June.

Series of failed deals

Multiple potential buyers have lined up to make offers for the hotel and casino, but thus far a deal has failed to materialize, and on March 13, a federal judge ruled she lacked the authority to approve an $82 million proposed deal involving Florida developer Glenn Straub.

Concerned that any such transaction could result in their eviction, the tenants currently residing in the property have appealed the proposed sale. Because these legal matters are still pending in the federal court system, U.S. Bankruptcy Judge Gloria Burns contended she does not have the jurisdiction to authorize the $82 million sale.

Hearing

The hearing was scheduled so that Burns could consider a challenge to the ruling she provided March 13, but this event was pushed back with the agreement of all parties, The Associated Press reported.

In addition to reviewing the judge’s decision, the hearing was scheduled to examine whether unpaid financial obligations should prompt ACR Energy Partners, the troubled company’s power provider, to shut off the hotel and casino’s power, according to the news source.

ACR, which claims that Revel has failed to pay $20 million in bills since June, spent roughly $160 million building the central utility plant of the hotel and casino, the media outlet reported.

Amid all these concerns, the various parties involved agreed over the weekend to postpone the hearing to an undetermined time, opting to push back everything except a hearing regarding professional fees, The AP reported.

Revel situation uncertain

The decision to push back the hearing didn’t help alleviate the Revel Hotel and Casino’s plight, as the latest botched attempt at a sale – involving a $82 million sum – came after a handful of prior failures.

Previously, two separate proposed transactions – a $110 million sale involving Toronto-based Brookfield US Holdings LLC and a $95 million deal worked out with Straub’s company Polo North Country Club – also failed to close, according to NJ.com.

Not only this situation left Revel Hotel and Casino – as well as its tenants – in the lurch, but the future role of Wells Fargo, which is the primary lender of the troubled company and has been funding the bankruptcy proceedings, remains uncertain, The Wall Street Journal reported.

Recently, a lawyer representing Wells Fargo has stated the lender will not pay for another sale process, according to the news source. The financial institution has claimed that by the end of March, Revel will owe it $75 million worth of funds related to the bankruptcy in addition to $75 million in separate debt.

Potential $95 million deal

Amid this complicated situation, John Cunningham, a lawyer for Revel Hotel and Casino, outlined what could happen to the troubled business going forward, the media outlet reported. One option is for Straub to purchase the hotel and casino through a $95-million transaction approved by the court system.

While the Florida real estate developer offered that amount before, Revel submitted a motion to terminate the proposed $95 million deal in February, which Burns approved, according to NJ.com.

That month, Cunningham stated he thought the odds of this particular transaction closing were nonexistent, and a new proposed deal – the $82 million transaction referenced previously – was brokered soon after, the media outlet reported. Pursuant to this proposed deal, Polo North placed the entire purchase price aside into an escrow account.

Hope for a sale

Even though the proposed transaction is being held up in the federal court system, Straub told The Wall Street Journal he is unfazed. He emphasized that even with a court order, there are different ways to sell a property.

While Straub might look into new approaches, Revel Hotel and Casino could find a buyer through other avenues, as Ramy Ibrahim, the investment banker for the troubled company, indicated as many as 19 different parties have stated their interest in the property, the media outlet reported.

In spite of these prospects, it is worth keeping in mind that any proposed deal that fails to garner the approval of Revel’s tenants and power provider could generate a new string of appeals like the ones brought forth recently, according to the news source.

Chapter 7

If a deal fails to materialize, the Revel Ch. 11 bankruptcy could end up being converted to a Chapter 7 bankruptcy proceeding, an outcome which some of its creditors support. If this possibility comes to fruition, the Office of the United States Trustee would appoint a trustee responsible for overseeing the liquidation of the company’s assets.

When the $82 million sale was announced, ACR submitted a motion to move the proposed transaction from reorganization under Chapter 11 to a Chapter 7 case, NJ.com reported. However, Shaun Martin, chief restructuring officer for Revel, contended that liquidation would be “disastrous.”