By Tom Corrigan
Following the collapse of yet another deal to sell Atlantic
City, N.J.'s defunct Revel Casino Hotel, time may be running out
for the resort to find a savior.
Revel, which has seen two bankruptcy court-approved deals fall
through, must once again begin discussions with potential buyers.
And with no other proposed buyer yet to emerge, Revel's continued
survival is heavily dependent on primary lender Wells Fargo &
Co.'s willingness to continue to provide funding.
Though Revel shut its doors in September leaving thousands out
of work, millions of dollars in legal expenses and utility payments
continue to accrue each month. Much of that has been paid for by
the Wells Fargo loans.
"Wells Fargo has to make this calculated decision about whether
to fund losses with the hope they will be able to make up those
losses with an increased purchase price," said Joel Levitin, a
lawyer at Cahill, Gordon & Reindel who isn't involved in the
case. "That's a difficult call for a party in that situation to
make, and they probably revisit that decision every day."
A spokeswoman for Wells Fargo declined to comment Monday.
Shaun Martin, Revel's chief restructuring officer, said at a
hearing last week that no formal offers have been made for Revel,
but that there have been "a lot of inquiries." If a buyer can't be
found, Mr. Martin said that the resort could be forced into
liquidation.
Two previous deals to sell the property--the first to a Canadian
private-equity firm and the second to a Florida-based
developer--fell apart over disputes with the former tenants and ACR
Energy Partners LLC, the operator of the power plant that supplies
Revel's electricity and hot water.
Any new deal or conversion of the case to a chapter 7
liquidation would be subject to approval by Judge Gloria M. Burns
of the U.S. Bankruptcy Court in Camden, N.J.
On Wednesday, Judge Burns will hear arguments over a settlement
Wells Fargo reached with Revel and its unsecured creditors last
month over a hotly contested $125 million financing package for the
closed resort.
The deal has been met with resistance from ACR Energy Partners
as well as other former tenants who say the financing pact, which
prioritize the bank's debt ahead of other creditors, will leave
them with little or nothing.
But without the additional security, Wells Fargo may be less
inclined to continue to fund Revel's case, sources familiar with
the case say.
Under the proposed settlement, Wells Fargo will share $1.35
million of any sale proceeds with unsecured creditors. The bank
also agreed to set aside an additional $150,000 of sale proceeds to
fund possible litigation that could lead to greater returns for
creditors.
Revel, which cost $2.4 billion to build, opened in the spring of
2012. It filed for Chapter 11 protection for a second time in June
of last year.
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