Judge blocks sale of Revel pending appeal

A federal appeals court judge in Philadelphia has blocked the sale of the former Revel Casino Hotel in Atlantic City until an appeal of sale terms by nightclub operator IDEA Boardwalk L.L.C. is decided.

Third U.S. Circuit Court of Appeals Judge Thomas L. Ambro ordered a temporary stay of the sale late Friday.

The sale of the $2.4 billion Revel to Florida investor Glenn Straub for $95.4 million must close by Feb. 9, according to his agreement with Revel. Straub is determined to buy the property without any obligations to the restaurants, nightclubs and other businesses that had leases to operate in Revel - and has received permission to do so from a bankruptcy judge.

The owner of IDEA Boardwalk welcomed the stay order by the appeals court judge.

"Revel's bankruptcy should not give it the right to unlawfully seize the assets and on-going business" of IDEA Boardwalk, said Michael Barry, co-president of IDEA's parent company. "The court's stay will allow IDEA the opportunity to confirm its legal rights to remain in possession of its leased premises and continue to operate its business."

Gloria M. Burns, U.S. Bankruptcy Judge in Camden, on Jan. 8 approved the sale to Straub free and clear of all encumbrances. That includes the lease with IDEA and an agreement with ACR Energy L.L.C., which owns a $160 million utility plant that provides hot and cold water and electricity to Revel.

A U.S. District Court judge, also in Camden, on Jan. 21 denied a bid by IDEA Boardwalk, ACR, and others to block the bankruptcy court's sale order while they pursued an appeal.

IDEA Boardwalk appealed that denial to the Third Circuit Court of Appeals in Philadelphia, where Ambro issued the stay and set up a short timeline for a decision. He gave Revel's attorneys until Tuesday at 4 p.m. to respond to IDEA Boardwalk.

Straub said recently that he would abandon the deal for Revel if he can't buy it by Feb. 9 - the first weekday after the deadline in his purchase agreement - and then fight to get his $10 million deposit back.

"It's very important to us that we be allowed to close in the manner provided by Judge Burns," Straub's attorney, Stuart J. Moskovitz, said Saturday. Moskovitz said at a Jan. 20 hearing that Straub wants the freedom to move venues around within Revel, while opening the property up to the beach.

Lawyers for Revel could not be reached for comment on Ambro's order.

Atlantic City Mayor Don Guardian had this reaction Saturday to the appeals court order that could derail the sale of Revel to Straub: "Man. One day I'd just like to have a good day. "

Guardian said he had discussions with Straub indicating that Straub wanted to keep the restaurants and "the best night club, the best day club" and find a "powerful" casino operator.

IDEA Boardwalk, a subsidiary of Ironstate Development Co., in Hoboken, N.J., signed a 25-year lease to operate the HQ night club inside Revel and the HQ beach club next to the boardwalk, plus Revel's Center Bar.

IDEA Boardwalk invested $16 million in those facilities and is trying to preserve its rights to the property. The company has argued that because its venues have their own entrances they could continue operating even though Revel is closed.

ACR Energy, which owes bondholders $118.6 million, did not pursue the same relief as IDEA Boardwalk in appeals court, but could benefit from Ambro's ruling.

Revel opened in April 2012, accompanied by the hopes of its developers that it would play a leading role in a revival of Atlantic City's gambling industry. It never managed to make a profit, however, even after a 2013 bankruptcy and an earlier financial restructuring wiped out more than $2 billion in Wall Street debt.

Source: Philly.com