Glenn Straub warned that he would not give up on the Revel auction without a fight. True to his word, Straub filed a motion on Monday officially objecting to the sale of the Revel Casino to Brookfield Asset Management.
Northjersey.com first reported on the story and detailed many of the highlights of the motion. Straub has been very vocal about his displeasure regarding the lack of transparency of the bidding process. His complaints began prior to the resumption of bidding last week and now it seems that Straub will try to use legal muscle to seek a new auction.
Straub Points to Suspicious Timing and “Life and Death Situation” in Motion
As we all know, bidding on the now defunct Revel Casino resumed last Tuesday with Straub’s $90 million used as a stalking horse bid. Brookfield then countered with $94 million. Straub bumped his bid up to $95 million but Brookfield countered with a $98 million bid before dinner.
This is where things got interesting. Around 7:45 pm, Straub said he needed to talk to his accountants and Revel supposedly agreed to an adjournment at 8:15 pm. Two hours later, an announcement was made to hold over bidding until the next day.
At 11:25 pm, Brookfield put in a bid of $110 million, but only if that bid is announced as the winning bid by 6 am on Wednesday. Straub claims that this did not leave him enough time to bid. The filing claims that Revel acknowledged the contingency bid placed by Brookfield was a “departure” from the planned course for the auction.
Here’s where things got dicey. Revel is reported to have told Straub that a counter bid needs to be placed by 5 am. This announcement was made at 3:45 am. This left just over an hour to formulate and place a bid.
From there, Straub and his attorneys argued that in addition to not having enough time to consult financial partners, Straub was dealing with health issues. Calling it a “life or death medical situation,” Straub reportedly left important pills back in Palm Beach.
Straub and associates were unable to place a counter-bid before 5 am and Brookfield was declared the winner at 5:13 am.
After the announcement was made, Straub’s attorneys attempted to lodge several complaints about the process. The filing claims that they were then threatened with non-payment of both their $3 million breakup fee and their initial $10 million deposit.
Were There Other Bidders?
The filing also pointed out that there were other bidders present during the auction on Tuesday but none chose to bid. As quoted from the filing, “As noted above, other bidders were present [on Tuesday]. Yet they chose not to submit bids. We do not know why. There is no way to rule out the possibility, if not likelihood, that their bids were chilled by the lack of transparency in the process and the obvious antagonism by the Debtors’ counsel to all but the favored bidder.”
It would seem odd that other bidders would show up and choose not to put in a bid, especially considering that bidding had not reached $100 million before dinner. The filing does not appear to name these other bidders and news reports have not mentioned other bidders. A couple of days prior to the auction, there were reports that two bidders were being considered for the sale and it is assumed that Brookfield was one of those parties.
Does Straub Have a Case?
There are some matters in this case that will likely warrant investigation while others seem a bit far-fetched. The “contingency bid” by Brookfield and the timeline to the winner’s announcement will likely come under question. Why did the casino agree to these terms and not allow Straub sufficient time to consult with financial partners?
Next, how much truth is behind claims that Revel officials threatened to withhold payment of the deposit and breakup fees? Also, were there other bidders in the auction and why did they choose not to bid?
As far as Straub’s health playing a role in the timeline, it seems unlikely this will have any sway. A person with a true life-threatening condition is unlikely to forget important medications. How long had he been without medication, and if he had forgotten, why hadn’t other steps been taken to acquire the required pills? It’s hard to see the court giving this complaint much consideration.
According to the motion, Straub is making several demands with the most important being a new auction. These complaints will be heard on Tuesday at a hearing in Camden, NJ.
According to 6abc.com, Straub may make a play at the auction for the property. A representative for Straub claims that a bid exceeding $110 million may be made at the hearing and that the judge has the authority to accept it.