Citing “the palpable risk of losing a ready buyer,” a federal judge on Wednesday denied requests by Revel tenants to halt a sale of the property while they appeal the terms of the transaction.
Real estate developer Glenn Straub says he might abort a $95.4 million deal for the property if the sale isn’t finalized by Feb. 7, the contractual deadline.
Without an alternative buyer waiting in the wings, Revel would be left “empty and commercially unproductive,” Chief U.S. District Judge Jerome Simandle wrote in a 50-page opinion.
Revel’s tenants, including its sole power supplier, tony restaurants and HQ nightclub, say massive investments they’ve made at the property could be wiped out if the sale happens on terms approved by another judge Jan. 8.
That ruling, made by Chief U.S. Bankruptcy Judge Gloria Burns, says the property can be sold “free and clear of liens, claims, encumbrances and interests.”
A “free and clear” sale allows Straub’s company, Polo North Country Club, to cancel leases and boot tenants from the beachfront property, running roughshod over their rights, the tenants say.
IDEA Boardwalk, the real estate developer behind HQ nightclub, says its $16 million investment at Revel could vanish under new ownership.
And Craig Martin, an attorney for ACR Energy Partners, said ACR could be “forcibly evicted” from land leased at the Revel complex “and required to dismantle its power plant,” which it built with about $158 million in financing.
“The land that we have the right to occupy would have been sold to another party, which would have the right to kick us off it,” said Martin, who added that the company was prepared to appeal its case to the Third Circuit Court of Appeals.
But the plant is the sole readily available source of energy for the closed resort. And Revel is ACR’s sole customer.
Simandle told Martin that given “the symbiotic relationship between that power plant and this building,” he doesn’t see Straub’s company “delivering that eviction notice to your client.”
The challenge in deciding whether to put the deal on ice, Simandle said, is that “I have to become a fortune teller.”
But Revel’s future without Straub, Revel attorney Jason Zakia said during the hearing, is acutely clear: “Disaster.”
“Your honor, there is no one behind Polo North,” Zakia said. He said Revel’s bankrupt parent, which has already seen a deal with Brookfield US Holdings collapse, is burning through $8 million a month to power the property and otherwise keep it on life support.
“Right now, it’s not an asset. It’s a liability,” he said.
As for huge possible losses for Revel’s tenants, “All I can say is that the bankruptcies of Revel have resulted in many, many, many parties losing very substantial amounts.”
“There are a huge number of parties in this case that are losing huge amounts of money because of the fact that Revel failed,” he said.
After Tuesday’s hearing, Straub said he was headed to South Jersey for a meeting on his high-speed ferry project.
“I need to bum a ride down to Atlantic City,” he told a group of reporters. “I’ll pay your gas.”
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