U.S. District Judge Jerome B. Simandle declined to halt the sale of the Revel Casino to a Florida-based land development company on Thursday. Revel AC Inc., the bankrupt Revel Casino's creditors, had filed a motion to have the $95.4 million sale of the casino to Glenn Straub's Polo North Golf Course to be halted.
Judge Simandle ruled that the creditors had not shown they would be irreparably harmed if the sale went through. Simandle, who presided over the federal district court in Camden, New Jersey, said the creditors also had failed to show they had a strong possibility of succeeding on appeal.
Polo North
The ruling appears to clear the way for Glenn Straub to purchase the casino, though the Florida developer himself is not happy with the current terms. Straub filed a motion in bankruptcy court asking for the purchase price to be lowered to $87 million, which is the original $90 million he bid as the stalking horse bidder, minor the $3 million fee he earned when a late $110 million bid by Brookfield Management edge Polo North aside.
Even if he goes ahead with the purchase, negotiations to reopen the failed casino could be contentious. One of the parties to the suit in Simandle's court were ACR Energy Partners LLC, who are both tenants at the Revel Casino and providers of the skyscraper's energy.
Straub Threatened to Withdraw from Deal
Polo North Country Club Inc., which is owned by Glenn Straub, has said it would forfeit its $10 million deposit if the Revel AC's lawsuit went through. That would have tied the new owner to contracts which had made it impossible for the previous ownership group to make a profit.
AC Energy Partners LLC have a contract to provide electricity for the Revel Casino. In exchange for the building's power, AC Energy Partners receives $3 million per month. That amount seems to have destroyed the business model of the original Revel Casino, which declared bankruptcy twice within a 15-month period.
Brookfield Management Did the Same
When Brookfield Management won the original bid for $110 million, the Toronto-based leisure and entertainment company tried to renegotiate the contract with AC Energy. When the energy company would not change its rates, Brookfield Management pulled out of the purchase, citing it could not make money under such terms. Brookfield gave up an $11 million deposit as the price of exiting the purchase plan.
Now, Glenn Straub says he must renegotiate the energy costs on Revel Casino, or himself exit the purchase. To do so, Straub would need to forfeit almost $10 million--10% of the cost of buying Revel Casino.
Polo North the "Only Potential Acquirer"
Three different owners or potential buyers have made the same complaint, yet the AC Energy Partners wants to hold to the contract. They and the Revel Casino owners argued in federal court that they would be irreparably harmed by Glenn Straub's purchase of Revel Casino.
Judge Jerome Simandle wrote in a 50-page opinion, "Polo North now stands, after a year's efforts, as the only potential acquirer [for Revel's assets]. In that regard, the court notes that, the palpable risk of losing a ready buyer demonstrates, without more, a risk of substantial harm."
AC Energy Claims Straub Has Unfair Advantage
Craig Martin, a lawyer for AC Energy Partners, claimed that proceeding with the current purchase plan would put Glenn Straub at an unfair advantage in negotiating terms. Under the current plan, Martin says Straub could evict AC Partners. The energy company invested $160 million in building the infrastructure to supply power for the building.
Judge Simandle saw the case another way. Because Polo North has no way of getting power to the Revel Casino otherwise, Simangle wrote he "can't foresee a situation where Polo would issue that eviction notice."
Sale May Finally Happen
With that in mind, the Revel Casino appears as if it will sell to Polo North for $95.4 million. The resort cost $2.4 billion to build, but it faced crushing debt from the day it opened its doors. When the casino closed in September 2014, it put 3,000 workers out of jobs and symbolized the failed ambitions of Atlantic City's gambling industry. Revel was the most expensive casino ever built on the Boardwalk--and its starkest failure. In all, the casino was in operation only 29 months, but faced two bankruptcies.
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