Revel Sale Postponed After New Bidder Emerges

on March 5, 2015

The Revel Casino Hotel has never done things the easy way, and it seems that even when it appears that the process is moving forward, there’s always something new that might just hold things

Revel Atlantic City sale delayed

Glenn Straub once again saw his purchase of the Revel delayed by a US Bankruptcy Court Judge. (Image: Gary Coronado/AP)

up. That became the case again this week when a new potential buyer for the property was revealed, prompting a judge to once again postpone a decision on the sale of the former casino.

The drama started on Tuesday, when an 11th hour bid came in from Los Angeles developers Izek Shomof and Leo Pustilnikov. The two developers offered to buy the Revel for $80 million: a deal that would make more money for Revel AC than the $82 million proposed sale to Florida developer Glenn Straub, considering that the Revel has already collected a $10 million deposit from Straub that wouldn’t be refunded in either case.

Shomof Promises Friendlier Relationship with Revel Tenants

Pustilnikov made comments that sounded as though he and Shomof were trying to get on the good side of the many nightclubs and restaurants that hold leases at the Revel, tenants who have had issues with Straub’s attempts to void those leases so that he could move or remove some of their venues.

“We would like the tenants to remain,” Pustilnikov said. “The tenants have invested a lot of money into their spaces and have performed well in their spaces prior to them being unceremoniously removed.”

The developers also said they would be visiting Atlantic City on Tuesday to take a look at the Revel, even if they had not received permission to tour the facility. They did, however, arrange for a tour of the power plant devoted to providing electricity to the resort.

That tour ended up including four other developers who are friends with Shomof, and included scheduled meetings with attorneys for the power plant and a meeting with Atlantic City Mayor Don Guardian. During the day, the developers said they would be sending a lawyer to a Wednesday hearing at the US Bankruptcy Court in Camden in order to try to halt the Revel’s sale to Straub.

Judge Delays Sale By One Week, Asks Revel to Find Best Deal

At that hearing, Judge Gloria Burns denied approval for the $82 million sale to Straub, a sale that appeared to be in the bag just a few days ago. That ruling came after a lawyer for Shomof offered that the current process had been unfair, and that Straub had threatened to sue him for interfering in the sale.

While Burns only delayed ruling on the sale for the week, she made it clear that she wanted to see more effort from Revel AC before she would be content.

“I think in order for me to be comfortable with this you need to satisfy me that every stone has been overturned to find the best deal,” Burns said.

On the other hand, lawyers for the Revel and for some of the other affected parties implored Burns to accept the deal with Straub, saying that the certainty that the sale could go through to him outweighed the possibility of finding a better deal somewhere else.

A lawyer for Wells Fargo, the bank that is funding the bankruptcy through a loan, warned the court that more delays could lead to the bank pulling their financial support.

“Then maybe a conversion to a Chapter 7 is the right way to go,” said Burns, referring to a liquidation rather than the Chapter 11 reorganization that is currently being pursued.