Anyone interested in buying a $2 billion casino resort for 5 percent? If so, head up to Atlantic City as the Revel Casino will be back on the market effective Tuesday morning. According to CBS New York, Revel lawyers will file a motion in bankruptcy court on Tuesday to cancel a deal with Glenn Straub after he was unable to close on the property by midnight Monday.
Straub had been seeking an extension on the closing date to February 28 after a U.S. District Court judge refused to terminate the rights of Revel tenants. He had wanted to purchase the property without any restrictions, which meant that he had the right to immediately kick former tenants out of the property. This would have cost millions in investments by these tenants.
Straub Didn’t Close By Midnight So Revel Walked
When former tenants went to a federal appeals court to fight for their rights, Straub attorneys hinted that he might walk away from the sale entirely. On Friday, an appeals court reversed a previous ruling that the property could continue without consideration of property leases.
On Monday, U.S. District Court Judge Jerome Simandle continued that stay. The property could have still closed, but Straub could not kick out the tenants. Stuart Moskovitz, attorney for Straub, stated that they couldn’t close because they had no idea what they were closing on.
Following Monday’s ruling, Revel gave Straub until midnight to close on the deal but his attorneys stated that this was not possible. Lawyers for Revel had claimed they would file motions to cancel the sale at 12:01 am Tuesday but ABC News reported that the filing would be done during business hours on Tuesday.
What’s Next and Does Hard Rock Now Become a Player?
Unless something is negotiated between Revel and Straub, this will be the second sale of the casino to have fallen through since the casino auction last year. Brookfield Asset Management originally agreed to purchase the property for $110 million and then later threatened to back out over a dispute over construction funding with the casino’s energy provider. Revel tried to save the deal but Brookfield made extra demands that the casino could not meet.
After the Brookfield sale fell through, Straub was awarded the backup bid at $95 million. He had originally threatened to try to push for an $87 million sale price but apparently relented on that threat. Most recently, Straub had claimed that a water park was in the casino’s future.
The collapse of the Straub deal may not be the last straw for the casino. Last week, Hard Rock International CEO Jim Allen received preliminary authorization to operate a casino in Atlantic City. Since that time, it’s been reported that Hard Rock has spoken with Straub about possibly running a casino in Revel. At that time, there were no plans on actually owning the property.
Now that both bidders from the bankruptcy auction have failed to purchase the property, it will be interesting to see what “Plan C” is for the bankrupt casino. Revel attorney Michael Viscount stated, “We need to come up with a Plan C really quickly,” and one has to wonder whether Hard Rock has now become that plan.
If so, will Hard Rock be able to come in and purchase the property under what Straub had offered. Perhaps the easiest way to a closure would be for Hard Rock to offer $95 million for the property with a promise to work with tenants. Logically that would speed things up, but the bankruptcy court could decide to hold another auction, which may mean several more months of “Who Wants to Buy Revel?”