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Revel deal could be dead by midnight:
The sale of Atlantic City's Revel Casino Hotel to Florida investor Glenn Straub for $95.4 million was in deep jeopardy late Monday, as a midnight deadline to close the deal loomed.
"We are not closing by midnight tonight because we have no idea what we're closing on," Straub's attorney, Stuart J. Moskovitz, told U.S. District Judge Jerome B. Simandle at a Camden hearing earlier in the day.
Michael Viscount, an attorney for the bankrupt Revel, insisted that the deal must close by midnight, as required by Revel's purchase agreement with Straub.
If that does not happen, Revel will ask for bankruptcy-court permission to terminate the deal Tuesday, Viscount said after the hearing.
In that event, Straub would likely lose his $10 million deposit, though Moskovitz vowed a fight for the money that would cost the bankruptcy estate much more in legal fees.
If both sides follow through on their threats, what happens next? "We need to come up with a Plan C really quickly," Viscount said.
Viscount said there was no need in the short term to convert the Chapter 11 case, in which the company remains in charge, to a Chapter 7, in which the sale of the property would be turned over to a bankruptcy trustee.
Plan A was the sale of Revel, which opened in April 2012 at a cost of $2.4 billion and is in its second bankruptcy, to Brookfield Asset Management Inc. for $110 million.
Brookfield, a Toronto real estate investment firm, backed out in November - abandoning its $11 million deposit - after failing to negotiate a satisfactory deal with ACR Energy Partners L.L.C., the company that supplies Revel's utilities.
Straub was Plan B, the backup bidder. He has been determined to buy Revel with no obligations to the entertainment venues, restaurants, and retailers that have unexpired leases to operate in the casino.
Those companies, including IDEA Boardwalk L.L.C., which operated the HQ beach club and HQ nightclub, have won court orders, including a favorable ruling from Simandle on Monday, preventing Straub from stripping them of their rights while they appeal a bankruptcy order that allowed him to do so.
On Sunday, Straub filed a bankruptcy-court motion for an extension of his deadline, arguing that he "cannot and should not be expected to close on a sale when [his company] has no idea what it is purchasing." That is a reference to the possibility that Straub could buy the building and have to deal with 10 or so current tenants.
Bankruptcy Judge Gloria M. Burns scheduled a Wednesday hearing to consider the motion.
"For Revel to terminate the purchase agreement prior to that hearing is unreasonable, irresponsible, and unconscionable," Moskovitz said.
Straub's request for more time would likely face opposition from Wells Fargo, which has lent Revel $70 million to pay for its bankruptcy and has repeatedly expressed concern that its bridge loan to Revel will turn into a pier.
Revel's attorneys have often assured judges that disaster would ensue if it cannot quickly complete the sale to Straub.
Stuart M. Brown, an attorney for ACR, noted that Revel has already been through several botched sale attempts.
"Nothing catastrophic happened," Brown said to Simandle. "I suggest, your honor, that nothing catastrophic will happen if the Straub deal doesn't close."
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