Glenn Straub will get his chance to purchase the now defunct Revel casino in Atlantic City but not after threatening to pull the plug on the entire deal. According to Philly.com, U.S. Bankruptcy Court Judge Gloria M. Burns approved the new auction date of September 24 and the $3 million breakup fee despite objections from the bankruptcy trustee.
Last week, real estate mogul Glenn Straub placed a $90 million cash bid on the property with the demand that the auction date be moved to September 24. Also, a $3 million fee would be awarded to Straub should someone outbid him by at least $1 million.
Delay Likely Would Not Make Much Difference
The hearing to consider the new auction date was held on Monday in Camden and lasted for over four hours. Lawyers representing both Straub and Revel tried in vain to negotiate terms for a delay but according to Revel lawyers, Straub wanted too many concessions.
Judge Burns was not fond of setting the September 24 auction date but agreed because she didn’t believe that extending the time for the auction would make much difference in gaining new bids for the property.
Lawyers Cave When Straub Threatens to Pull Out
Lawyers representing Revel and its creditors worked hard to try and force a delay for the auction proceedings but ultimately had their hand forced by Straub. According to reports, Straub was willing to pull out of the deal completely should he not get his way.
If the property had other bids, this would not be a problem. However, the casino has tried twice before to hold an auction for the property and failed to receive bids. Furthermore, Straub threatened legal action to recoup his $10 million deposit already placed on the Revel should he choose to back out.
Legal action would incur even more expense on Revel and its creditors and they cannot afford further losses. Apparently, the property is still racking up debt of $5 million per week despite shutting down.
Revel Could Reopen in Two Weeks Following the Sale
While not stated by the judge, another potential influence on allowing Straub’s bid may have been his insistence that the property could reopen within a couple of weeks after the close of the sale.
Stuart J. Moskovitz, attorney for Straub, revealed to the judge that parts of Revel could reopen within two weeks provided the property sells quickly. Those parts would not include a casino. However, a casino is planned sometime in the future.
Straub has contended from the beginning that casino gambling would be part of the new property, but not a major part. He reiterated that position on Monday, saying that the casino will be there, just not the size that it was.
The sale will commence next Wednesday at the New York offices of White & Case L.L.P. Straub’s offer sets the baseline for bidding, a bidding that will likely result in the property going for less than 10% of it’s original construction costs.