Revel Sale Temporarily Put on Hold During Appeal

The $95.4 million sale of Revel AC Inc., the shuttered Atlantic City, New Jersey, casino, was put on hold at least temporarily by the U.S. Third Circuit Court of Appeals in Philadelphia.

Back in bankruptcy court, the casino got final court approval on Jan. 30 for a $71 million new-money financing that was increased to cover real estate tax payments to be made under a settlement with the city. The loan also converts some pre- bankruptcy secured debt into a post-bankruptcy obligation.

The news comes on the heels of Caesars Entertainment's winning a bid to have its bankruptcy hearing in Chicago.

On Jan. 8 the bankruptcy judge approved selling the Revel property to Glenn Straub’s Polo North Country Club Inc. On Jan. 21 a federal district judge in New Jersey refused to block the sale pending appeal from the approval order by four tenants, including operators of nightclubs, restaurants, and the power plant.

A nightclub operator, Idea Boardwalk LLC, filed papers last week with the Third Circuit seeking a stay pending the appeal. The nightclub argues that the sale violates a provision in bankruptcy law saying that a tenant leasing property from a bankrupt can’t be ousted from occupancy, as the Revel sale authorizes.

On Jan. 30, Circuit Judge Thomas L. Ambro, a bankruptcy lawyer before becoming an appellate judge, enjoined Revel from completing the sale to Straub at least until the circuit court decides whether the sale should be held up until the appeal is completed.

Ambro directed Revel to file papers by tomorrow in opposition to a stay pending appeal. Ambro’s terse order doesn’t indicate whether he’s inclined to impose a stay for the duration of the appeal.

To read about the district court’s decision denying a stay pending appeal, click here for the Jan. 22 Bloomberg bankruptcy report. The district judge pointed how courts are divided on the question of whether a sale of a property can end a tenant’s occupancy rights when merely rejecting or terminating a lease can’t.

Revel had intended to sell the property for $110 million until Brookfield Property Partners LP, the winner of the auction, refused to complete the sale.

The Revel hotel and casino, which opened in April 2012, filed its second petition for Chapter 11 protection in June.

For more restructuring coverage, see our last Turnaround Tuesday column, Viggle Gets Another $2M Loan from CEO and the latest Distressed Company Watch List.