Revel sale to Polo North remains unfinished, fraught; liquidation discussed

54aafbc3b7cfb.imageOne could almost hear a lump in Revel attorney John Cunningham’s throat Friday while he asked, over the telephone, a federal judge to reconsider her just-announced decision that an $82 million sale of the failed resort couldn’t go forward as planned.
That’s one of a web of requests Chief U.S. Bankruptcy Judge Gloria Burns is still grappling with as Revel’s corporate parent desperately seeks to sell the property as a turnkey resort.
Burns said Friday that she lacks jurisdiction to approve the proposed $82 million, March 31 sale to Florida developer Glenn Straub’s company because the deal was a permutation of a prior one that’s being appealed in U.S. District Court.
In January, Burns ruled that Straub’s Polo North Country Club could buy Revel for $95.4 million and have virtually complete control over the premises, including commercial spaces leased by Revel’s tenants.
The tenants, some of which say they were islands of profitability that did brisk business even as their host floundered, appealed the January decision. They scored a tentative victory when Chief U.S. District Judge Jerome Simandle halted, for now, the provision of Burns’ Jan. order that called for a sale “free and clear” of lease obligations.
Burns said Friday that Polo North can finalize the $95.4 million deal, sans that provision. Or, she said, Revel can propose a new deal, which she would subject to a fresh round of scrutiny.
Burns is still refereeing a dispute between Revel and its sole energy supplier, ACR Energy Partners, which wants her permission to stop powering the property over unpaid bills — a move that could leave the property infested with fungus.
And Revel’s corporate parent, Revel AC, wants her blessing for a plan that would send the vast majority of sale proceeds to Wells Fargo, which has provided about $63 million, and counting, to fund Revel’s bankruptcy, plus about $75 million in the lead-up to Revel’s June Chapter 11 filing.
The tenants, including restaurants, nightclubs and ACR, which runs a $160 million power plant on land leased from Revel, could get virtually nothing under the deal and see their investments wiped out once a sale happens.
After nine months of grinding litigation, with a string of appeals and aborted deals, there’s not a bit of certitude about whether attorneys — for Revel, for the tenants, and for Atlantic City — will achieve what they’ve been after from the start: Revel reopened and employing between 3,000 and 4,000 this summer.
Liquidation, where the building is stripped for parts, from furniture to fixtures, and sold as a shell, is now being mentioned with increasing regularity in Burns’ courtroom, including by the judge herself, who on Friday for the second time described the case as “long and tortured.”
Meanwhile, Simandle is considering the tenants’ cases to determine what, if any, rights they have to spaces where they’ve invested millions of dollars.
Last month Polo North balked at closing the $95.4 million deal, claiming the appeals made it unclear what, precisely, the company would be buying. Days later Polo North agreed to pay $82 million so long as Revel AC continued fighting the tenants’ cases in U.S. District Court.
Oral argument in Simandle’s courtroom, down the hall from Burns’, is set for May 8.
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