Revel, the troubled $2.4 billion megaresort, is moving ahead with plans to overhaul its finances and ownership structure in U.S. Bankruptcy Court and before New Jersey casino regulators.
Since filing for Chapter 11 bankruptcy protection in late March, Revel has been speeding through the courts. A key hearing is scheduled Monday for a bankruptcy judge to confirm Revel's plan of reorganization, which would erase $1 billion of debt from the casino's balance sheet and give lenders ownership of the property.
"We are looking forward to the May 13 confirmation hearing, which marks the last major milestone in our restructuring process, and to emerging from our financial restructuring poised for a successful summer season," Jeffrey Hartmann, Revel's interim chief executive officer, said in a statement Tuesday.
However, some objections to the reorganization plan were filed this week by construction contractors that claim they have not been fully paid by Revel for work they performed on the casino.
Swamped with $1.5 billion of debt and millions in operating losses, Atlantic City's newest casino filed a "prepackaged" bankruptcy petition in cooperation with its lenders. Essentially, prepackaged deals allow companies to breeze through court without the huge legal expenses and uncertainty that typically accompany hostile bankruptcy proceedings.
Revel has been working with lenders to give them ownership of the casino in return for their debt. In the meantime, Revel Entertainment Group remains the owner.
Separate, but related to the bankruptcy restructuring, are plans for one of Revel's main lenders to seek New Jersey Casino Control Commission approval to take charge of the casino.
Chatham Asset Management and its affiliates have filed an application for "interim casino authorization," a preliminary step in gaining New Jersey licensing approval. Chatham will also become the holding company for Revel, according to papers filed with the commission.
Now that the application has been filed, the New Jersey Division of Gaming Enforcement has 90 days to conduct an investigation of Chatham and submit a report to the commission. The commission then has 30 days to hold a hearing and vote on Chatham's application.
Chatham is the only one of Revel's lead lenders that is applying for a license. Other Revel lenders will be seeking an "institutional waiver" from the extensive licensing process. Institutional investors may seek a waiver if they hold less than a 25 percent ownership stake in a casino. A list of Revel's lenders asking for a waiver will be made public in a future filing with the Casino Control Commission.
C. Patrick McKoy, a former Atlantic City casino executive, will assume the role of trustee while Chatham's licensing application is pending. Trustees typically serve as a safety net in the event a casino license is denied for an applicant. If Chatham's license is denied, for instance, McKoy would step in to take control of Revel and sell it.
Although activation of the trustee is unusual in New Jersey's regulatory history, it did happen during a highly publicized case in 2007, when Tropicana Casino and Resort's troubled former owners were denied a license. The trustee finally completed Tropicana's sale in 2009, after a process that was complicated by a legal fight over the casino's ownership, the recession and Atlantic City's slumping market.
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