NJ's bankrupt Revel casino gets cash lifeline to hunt for buyer
CAMDEN, N.J., June 20
CAMDEN, N.J., June 20 (Reuters) - Atlantic City's bankrupt Revel Casino Hotel has received court approval to borrow $23.9 million that it said would keep the 1,400-room resort operating for the coming month as it scrambles to find a buyer.
Revel filed for Chapter 11 bankruptcy Thursday afternoon and rushed to court early on Friday for a slew of court orders it said were vital to pay its 3,140 employees, soothe nervous vendors and honor programs that provide gamblers with key perks.
"The reality of the Revel situation today is that Revel has lost this year alone $75 million," John Cunningham, a White & Case attorney who represents the casino, told Judge Gloria Burns. "Even in peak summer season, Revel losses $2 million a week and relies on borrowed funds."
The loan is being provided by a unit of Wells Fargo, a creditor of the hotel.
The company will return to court on July 11 and could seek to increase the amount it borrows to $41.9 million.
The casino, which entered a two-month Chapter 11 bankruptcy in March 2013, warned employees Thursday it would lay them all off beginning on Aug. 18 if it could not find a buyer.
The bad news was the latest for the New Jersey seaside city. Gamblers have been lured to new gaming options in nearby states and the city has had to pay out millions to casinos that successfully appealed property taxes as their values slumped.
Cunningham told the court Revel had been close to an agreement for an unidentified party to act as an initial bidder in an auction the company intends to hold in early August.
"It's time for bidders who have expressed interest to put their money where their mouth is and participate in the process," Cunningham told the court.
If no bidders emerge, the casino plans to close.
Despite the company's dire finances, a U.S. Department of Justice official known as the U.S. Trustee, who acts as a bankruptcy watchdog, objected to holding Friday's hearing because it was called too quickly after the filing.
"What alternative is there?" Burns asked a lawyer for the U.S. Trustee. "If they can't operate and the alternative means closing the business, I'm not sure that's a good alternative."
When it opened in April 2012, Revel, built for $2.4 billion, was a centerpiece of New Jersey Governor Chris Christie's effort to bring Las Vegas-quality gambling to Atlantic City's declining gaming business.
Christie had provided a $261 million tax package to help build Revel after Morgan Stanley, which had begun construction, pulled out of the project two years ago and took a $932 million loss.
"This looks more and more like Atlantic City Hilton, although I hope not," said Jeffrey Sponder, a lawyer for the U.S. Trustee, referring to a boardwalk hotel that closed earlier this year. (Reporting by Tom Hals in Wilmington, Delaware; Editing by Bernadette Baum)