March 13, 2015 / 5:00 PM / 5 years ago

Atlantic City's Revel Casino fails again to get a deal

(Reuters) - Revel Casino’s hard luck continues after a U.S. Bankruptcy Court judge rejected its agreement for a sale to a Florida developer for $82 million, marking the third failed deal for the shuttered hotel in New Jersey’s struggling seaside resort of Atlantic City.

A man reads a sign at the Revel Casino Hotel notifying the public about its closure, in Atlantic City, New Jersey September 1, 2014. REUTERS/Tom Mihalek

Judge Gloria Burns in Camden, New Jersey, said she could not approve the sale because it would interfere with an appeal being pursued by casino tenants who argue that the deal would deny them their property rights.

The casino, which cost $2.4 billion to build, struggled from the time it opened in 2012 as neighboring states embraced gambling and siphoned off Atlantic City’s business.

Revel was one of four casinos to close last year in Atlantic City, which is struggling with a drastic drop in tax revenue and may face its own bankruptcy.

The casino’s advisers were seeking approval of an agreement to sell Revel to Glenn Straub, who agreed to buy it “free and clear” of lease agreements with tenants such as restaurants and nightclubs.

The Revel had already failed to close two previous sale agreements, one with an affiliate of Brookfield Asset Management, for $110 million, and a $95 million agreement with Straub.

After the price was lowered, Straub agreed to the latest deal.

Burns said Revel could come back to court and ask her to approve a sale that left the tenant’s leases in place, although she acknowledged Straub has called that a dealbreaker.

Tenants argued that other buyers may emerge. Los Angeles developer Izek Shomof has sent an attorney to recent bankruptcy hearings and has said he wants to buy the hotel for $80 million, which he argued would include more favorable terms for creditors than Straub’s deal.

Revel’s investment banker has told the court a number of interested buyers have emerged recently, but none have presented detailed offers.

The Revel features eye-catching design and had promoted itself as a fine-dining destination in a resort known for cheap buffets. The concept never caught on, and the current bankruptcy is Revel’s second. The casino closed in September.

Atlantic City leaders are desperate to get the hotel open again.

The city has struggled to balance its budget, and Governor Chris Christie appointed an emergency manager earlier this year who is being aided by Kevyn Orr, the attorney who took Detroit through its historic bankruptcy.

Reporting by Tom Hals in Wilmington, Delaware; Additional reporting by Hilary Russ in New York; Editing by Chizu Nomiyama and Leslie Adler

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