The losing bidder in a bankruptcy court auction for Atlantic City's former Revel Casino Hotel isn't ready to fold just yet. An attorney for Florida developer Glenn Straub filed an appeal in US bankruptcy court to try and stop the sale of the Revel to Brookfield Asset Management.
Revel's management chose Brookfield as the winner with a $110 million bid earlier in October. But Straub claimed the auction was rife with improprieties.
“We absolutely are going to challenge it,” Straub's attorney Stuart Moskovitz said. “We believe this entire auction was done improperly, from start to finish.”
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Among the polo-playing developer's main complaints was that Revel improperly accepted a bid from Brookfield after a specified deadline, that Revel's attorneys reneged on an agreement to share information with him on competing bids, and that six hours of closed-door meetings on what was supposed to be the first day of bidding was improper.
Straub's $90 million “stalking horse” bid set the floor for the auction; he will earn a $3 million breakup fee if the casino goes to someone else.
Revel, Atlantic City's newest casino, closed on Sept. 2 after just over two years of operation, during which it never turned a profit.
The casino hotel cost $2.4 billion to build; the $110 million winning bid represents a 95 percent discount on that price.
Brookfield also owns the Atlantis Paradise Island casino in the Bahamas. It is a global firm with headquarters in Toronto, with $200 billion in assets under management.
Brookfield told securities regulators in August that it was unable to make an interest payment due that month on the Las Vegas Hard Rock, and was trying to work things out with its lenders.
The company said its deals are financed with so-called non-recourse debt.
“In other words, lenders get the asset if the investment does not work out, but they do not have the ability to go after Brookfield for a bad loan or mortgage,” spokesman Andrew Willis said last week. “This is standard risk management for asset management firms.”
He said the company is in “productive negotiations” with Hard Rock's creditors.
“Any issue with the Hard Rock's finances are specific to that property,” and would not affect Brookfield's ability to complete the Revel purchase, he said.