Judge set to decide terms of Revel's sale

U.S. District Judge Jerome B. Simandle said he expects to rule Wednesday on whether the operators of restaurants, nightclubs, and other venues at the former Revel Casino Hotel will be able to appeal the terms of the bankrupt Atlantic City property's sale to Florida investor Glenn Straub for $95.4 million.

"I'm not prepared to rule right now, but it won't be long," Simandle said at the end of a four-hour hearing Tuesday in Camden, acknowledging that whatever he decides, an appeal to the Third Circuit Court of Appeals was likely.

The overarching question is whether Straub should be able to buy the property without having to assume any of the leases or other agreements with entertainment venues, restaurants operated by Jose Garces, and others, or the firm that owns Revel's central utility plant, which supplies electricity and hot and cold water to the building.

Specifically, the entertainment and restaurant tenants, as well as ACR Energy Partners L.L.C., asked for a stay pending appeal of a bankruptcy judge's Jan. 8 sale order, which allows Straub to buy the property unencumbered by any of the leases and other agreements.

That sale order requires the deal to close by Feb. 7, after which Straub could potentially walk away from the deal, and take his $10 million deposit with him. Straub said after the hearing that he would not wait past Feb. 7 and would fight to get his $10 million back, unlike Brookfield Asset Management, which abandoned its $11 million deposit when it dropped its plans to buy Revel in November.

Lawyers for the tenants, including IDEA Boardwalk L.L.C., the operator of the HQ beach club and nightclub, said the sale could close as long as the provisions of the sale order stripping them of their property rights were stayed until they were properly argued in court.

Simandle appeared to sympathize with IDEA Boardwalk's statement that it spent $16 million outfitting its facilities and would get nothing when the sale proceeds were distributed.

"I'm very uncomfortable with that. It seems like they haven't gotten anywhere near the benefit of the bargain, and they have rights, too," Simandle said.

But Simandle was also wrestling with the possibility that Straub, who said he needs a free hand in revamping the former Revel, could walk away from the deal, leaving Revel's bankruptcy estate to burn through $8 million to $11 million a month.

Simandle asked Straub's attorney, Stuart J. Moskovitz, if Straub would abandon the deal if Simandle granted the stay or sent the issue back to bankruptcy court for further consideration.

"It becomes a realistic possibility," Moskovitz said.

Earlier in the hearing, Robert Schechter, a lawyer for a group of restaurants with leases that run for a dozen more years, said that if Straub abandoned the deal, someone else would step in.

"It's hard to believe that this $2.5 billion building . . . will be boarded up for the duration of my clients' leasehold rights," Schechter said.