Owners Cancel the Revel Casino Hotel’s Purchase, Pockets Straub’s $10 Million Deposit
The deadline set by the Revel Casino Hotel‘s owners has passed, so those owners will cancel the deal on Tuesday morning. Previously, Revel AC was going to sell the bankrupt casino resort to Glenn Straub of Polo North, a real estate development company out of Florida.
In ending the deal, Revel Casino’s owners plan to pocket the $10 million deposit paid by Glenn Straub to begin the purchase process. Given the way the auction process has gone to this point, ending the purchase agreement is likely to spur another lawsuit.
Polo North Asks for Extension
Stuart Moskovitz, Glenn Straub’s lawyer, has asked the judge in the case to push back the purchase deadline to February 28. Moskovitz and Straub will get an answer to that request at a scheduled Wednesday bankruptcy hearing. The lawyer also said Revel AC has no right to cancel the purchase so quickly, then pocket the $10 million deposit paid by Polo North.
Moskovitz also issued advice to Revel AC, the current owners of the casino property. He said, “If Revel terminates this contract, it will cost them tens of millions of dollars. They will never get a bid at these numbers. From Day One, Revel was a disaster, in every way imaginable.”
Deadline Midnight on Monday
The owners of the Revel Casino had said this past weekend they would cancel the purchase, if Glenn Straub had not completed it by midnight entering Tuesday morning, February 10. Straub told Revel AC he could not complete the purchase, because of uncertainty involving lawsuits filed on Friday and Saturday by restauranteurs, club owners, and nightclub owners who currently have contracts in Revel Casino.
Those lawsuits were filed, because Glenn Straub wanted to void the previous contracts with his tenants and start over from scratch. On Friday, certain prospective tenants filed in federal court and were granted a stay. That convinced other prospective tenants to file on Saturday, so US District Court Judge Jerome B. Simandle called a halt to Glenn Straub’s plans on Sunday.
Once Judge Simandle’s stay was in-place, it was all-but-certain that Revel AC would enforce its deadline ultimatum. Despite that, the 12:01 am deadline will pass. Michael Viscount, an attorney for the Revel Casino, said that it made better sense to file that paperwork early on Tuesday morning. Viscount said, “We do not plan to file that until the morning. The court is not going to read or act on any such thing at this hour.”
The Bankruptcy Process
This marks the second time in a three-month time period that the purchase of Revel Casino has been axed. In late-November 2014, Brookfield Asset Management pulled out of its $110 million purchase of Revel Casino. Revel AC pocketed an $110 million deposit by Brookfield at the time. The Toronto-based asset management company had stated publicly it would pull out of the purchase, becuase it was unable to renegotiate $3 million per month energy costs from the coop which supplied the building with power.
Once Brookfield was out of the way, Polo North was the only other interested buyer. Glenn Straub and Polo North had made the first bid on the Revel Casino, offering $90 million to become the stalking horse bidder. Prior to the purchase, Brookfield Asset Management joined in the auction process, topping Polo North’s $94.5 million bid with its own $110 million purchase.
Glenn Straub was not happy with that purchase price, because he claimed Brookfield had artificially increased the price, then pulled out the auction process. He wanted to purchase the casino for the original $90 million price, minus the $3 million he received as a stalking horse bidder. When the bankruptcy judge refused and called for Straub to buy the casino at the agreed-upon $94.5 million price, Straub’s lawyers filed an appeal to end the purchase of the casino.
Revel AC’s lawyers were aghast at that legal maneuver at the time, because they claimed they had never seen a buyer try to appeal his own legal victory. Revel Casino had cost $2.4 billion to build back before it opened in 2012, so the $94.5 million purchase price seemed like a bargain just two-and-a-half years later.
Then Glenn Straub began to have trouble bargaining with the same energy coop which had given Brookfield Asset Management trouble. Straub claimed he would have to pull out of the bidding if he was required to pay $3 million a month for electricity. Using the same logic, Glenn Straub sought to get out of the contracts for his restaurant, nightclub, and bar tenants.
Revel AC’s Decision
With their patience taxed, Revel AC set a Monday-at-midnight deadline for the purchase to take place. Stuart Moskovitz, a lawyer for Glenn Straub, said, “We can’t close if we have no idea what we’re closing on.”
Now, the casino’s owners are still looking for a purchaser. Michael Viscount told Wayne Perry of the AP, “We need to come up with a Plan C really quickly.”
Where that Plan C might come from is anybody’s guess. It would seem, if a third potential buyer existed, one would have stepped forward at some point along the way.