The impending sale of Revel Casino may be in limbo once again. The Atlantic City property was up for auction late last year, and after multiple hurdles, was finally supposed to be sold to a Florida developer by the name of Glenn Straub for $82 million. Now, ACR Energy, which runs the power plant that supplies 100% of the casino’s water and electricity, has filed an injunction to halt the sale.
The picturesque Revel Casino was built two years ago, with a final construction cost of $2.4 billion. Having never once turned a profit—and with New Jersey’s gambling revenue on a steady decline over all that time—the owners decided it was time to throw in the towel. After filing bankruptcy, the Revel Casino closed its doors on September 2, 2014.
From there, a bankruptcy court judge declared the casino would go up for auction, available to the highest bidder. In November, the highest bid of $110 came from a Canadian investment firm, but when they found out just how much debt the company would have to assume, they backed out. That left the Revel Casino going to Glenn Straub, who had submitted the second highest bid of $95.4.
Closure of that deal failed, at which time Straub said that he was still interested in the property, but for a reduced price of $82, with a very limited amount of the overall debt to be assumed. Straub’s company, Polo North Country Club, deposited $82 million in cash into an escrow account, and debtors began to look at the situation as a last chance to recover even a miniscule portion of their losses. Thus the sale was approved.
ACR Energy, who expects to lose $32 million if the Revel Casino deal goes through, wasn’t so complacent. The company took action on Wednesday by filing a motion to stop the sale of the property. ACR wants the judge to adjust the bankruptcy status from Chapter 11 to Chapter 7. As it stands now, under Chapter 11, the casino can be purchased and re-opened. Under Chapter 7, however, the property would be given into the care of a court-appointed trustee for liquidation of all remaining assets.
“The sale and compromises will leave the estates wholly insolvent, and administrative creditors, such as ACR Energy, with nothing,” explained ACR. “To make matters even worse … it has been coerced into providing financing to these estates, and is now being subject to the handcuffs inserted into the latest version of an oppressive purchase agreement.”
ACR noted that there is $50 million worth of creditor claims, and that Wells Fargo has only set aside $1.35 million thus far to cover those claims. The company called the impending sale “hopelessly flawed”, saying that a trustee could “use its powers to fund a new sale process with a fresh set of eyes.”
If Straub is allowed to purchase Revel Casino at the current price, he said the casino will be scaled down. His plans also include a medical-spa treatment facility and possible water park at the property.