The Revel Casino in Atlantic City has been a nothing but a disaster for owners and investors since it first opened nearly three years ago. Despite multiple efforts from a Florida developer to purchase and reinvigorate the property, the downward spiral continues. A judge in New Jersey’s bankruptcy court has postponed the hearing scheduled for today that should have resulted in outright approval or denial of the sale.
During last week’s hearings, Judge Gloria M. Burns refused to approve the sale of Revel Casino to Polo North Country Club, owned by Florida developer Glenn Straub. Last month, Straub and the owners of Revel agreed to an $82 million purchase price (significantly lower than Straub’s past $95.4 million bid). The sale must go through bankruptcy court, and due to new developments, and the longstanding issue of certain parties that are strongly opposed to the sale, the judge chose to postpone the hearings until a later, as yet undetermined, date.
This is the second postponement in as many weeks in the Revel Casino case. Earlier in the month, a new potential buyer arose in the form of another real estate developer from Los Angeles, California. Izek Shomov and his business partner, Leo Pustilnikov, issued an 11th hour bid of $80 million to the owners of Revel Casino. And while the value might seem lower, Shomov and Pustilnikov say their deal has a lot more backend value.
First, they cited a $10 million deposit on Straub’s $82 million bid that was forfeited, dropping the total worth of the Florida developer’s deal to $72 million. Secondly, according to reports, Straub’s plans for Revel Casino involve evicting all of the current business tenants at the casino, while Pustilnikov says their proposal for the Atlantic City property would allow those tenants to remain in place when the Revel reopens.
Two of the biggest obstacles in the sale of Revel Casino have been opposition from the tenants, as well as the power plant, ACR Energy, that serves as the sole provider of electricity to the facility. ACR says the sale to Straub is “hopelessly flawed” and will result in millions of losses for the power plant and all other debtors.
Two weeks ago, Judge Burns postponed the hearings in order to investigate the potential behind all proposals; that of Glenn Straub, Shomov/Pustilnikov and ACR Energy’s motion to appoint a trustee and liquidate all assets of Revel Casino. In Straub’s case, the judge said “I need to be convinced that it is the best deal the debtors can get,” and that she, “can’t tell that yet.”
The owners of Revel Casino are still in favor of Glenn Straub’s proposed $82 million buy-out of the casino, mostly because the financing for the deal has already been placed into escrow. It is a mere fraction of the $2.4 billion it cost the build the Revel Casino, but the Atlantic City facility has lost money at every turn since opening in April of 2012, resulting in two bankruptcy filings and the eventual closure of the property on September 2, 2014.