(Reuters) – A bankruptcy court judge approved an unopposed request to terminate the sale of the Revel casino in Atlantic City to Brookfield Asset Management at a hearing on Friday.
Brookfield, which had made a US$110 million bid for the casino, backed out of the deal because it failed to reach an agreement with bondholders who owned Revel’s power plant.
The company, which did not send a representative to the hearing and has not responded in court documents to notices to terminate the sale, stands to lose its US$11 million deposit.
The power plant is a trouble spot for the Revel and any prospective buyer.
After the casino lost construction financing in 2012, Revel was forced to find a new contractor to build its power plant. It contracted with ACR Energy Partners, but to get the deal done was required to back ACR’s financing of the project.
Even in bankruptcy, the financing and operating costs for the plant cost the company about US$60,000 a day before paying for any of the electricity or power required for heating or cooling. Turning it off, however, could allow mold to grow in the casino.
A hearing will be held Jan. 5 to complete a sale to the runner-up, Florida businessman Glenn Straub and his firm, Polo North Country Club Inc. Neither Straub or his lawyer attended Friday’s hearing.
Straub made an initial bid of US$90 million, providing a floor against which all other bidders had to compete. He eventually bid US$95 million during the auction but lost to Brookfield.
The casino cost US$2.4 billion to build and opened in 2012, but its sleek design and fine dining never caught on in the city.
Revel was one of four Atlantic City casinos to close this year, and the bankrupt Trump Taj Mahal could close later this month. Three other casinos are owned by an affiliate of Caesars Entertainment Corp that is struggling to avoid bankruptcy.
Revel filed for bankruptcy protection for the second time in June. It first filed for bankruptcy in March 2013.
The case in In Re: Revel AC Inc, U.S. Bankruptcy Court, District of New Jersey, No. 14-22654.
By Daniel Kelley
(Editing by Frank McGurty and Susan Heavey)
Photo courtesy of Shutterstock