Teams of attorneys spent hours behind closed doors at a North Jersey law office Tuesday in the hope that a bankruptcy auction for the Atlantic Club Casino Hotel will yield a new owner for the property.
Exactly who might be interested in the 33-year-old casino was unclear. The auction was closed to the public and its results were not released Tuesday. A hearing to confirm the sale is scheduled for Thursday in U.S. Bankruptcy Court in Camden in front of Chief Judge Gloria Burns.
“The proceedings are closed and discussions are ongoing,” said Cathleen Kiernan, a spokeswoman for Atlantic Club. “The outcome will be announced by the appropriate parties at the appropriate time.”
Messages left for Michael Sirota, an attorney representing the Atlantic Club, were not returned Tuesday. The attorneys met at Sirota’s Hackensack, Bergen County, law office of Cole, Schotz, Meisel, Foreman and Leonard.
Atlantic Club, formerly the Atlantic City Hilton Casino Resort, filed for Chapter 11 bankruptcy protection last month and is the second Atlantic City casino to take that step this year.
A new strategy to brand the casino as a haven for lower-stakes gamblers looking for a good deal has seen success this year as gaming revenue increased 13 percent in the first 11 months of the year to $132 million. Yet the rebound hasn’t come quickly enough for the property.
Court documents state that the casino lost more than $7 million in the first nine months of the year.
The property, owned by Resorts International Holdings, an affiliate of Colony Capital LLC, has been known as the Atlantic Club since a name change in February 2012. The former Hilton had lost its right to use the Hilton brand name in 2011 due to financial troubles and was briefly known by the acronym ACH.
Facing a possible foreclosure in November 2011, Colony Capital and a group of lenders backed the property with $24.3 million to keep it in operation. In exchange, lenders were given the go-ahead to foreclose on Colony’s Bally’s Tunica and Resorts Tunica properties in Mississippi.
Michael Frawley, Atlantic Club’s chief operating officer, called the move a vote of confidence in the property at the time.
Bids on the property could range significantly. Atlantic Club’s attorneys asked the court to allow a stalking-horse arrangement, in which a company can make a minimum-bid to prevent low-ball offers. According to court documents, a stalking horse was not secured.
Any purchase price of $25 million or more will also result in bonus payouts for seven top Atlantic Club executives. At $25 million, the group will split a $250,000 bonus with the scale increasing to as much as $2.1 million as bids approach $60 million. The arrangement, known as a key employee incentive plan, is used as a tactic to reward the property’s top management and encourage those individuals to remain at the property through the bankruptcy.
To date, the lowest amount ever paid for an Atlantic City casino was $31.5 million for Resorts Casino Hotel in 2010.
Online gaming giant PokerStars planned to buy Atlantic Club for a record-low $15 million earlier this year, but the deal later collapsed.
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