Judge declines to approve Revel sale

U.S. Bankruptcy Judge Gloria Burns declined Wednesday to approve, at least for a week, the third attempt to sell Revel, the bankrupt, closed albatross of a casino hotel - this one the second try with Florida developer Glenn Straub, for $82 million.

The delay allows a small window for eleventh-hour interest, notably from Los Angeles developer Izek Shomof, who flew into Atlantic City this week to make his own bid of $80 million.

Burns said she was putting off approval to allow consideration of other offers.

"Why not give it a little more time," Burns said to a courtroom of lawyers in Camden. "Approving this sale today, I think, is premature.

"I'm going to give the parties the opportunity to see what's out there," she said.

Shomof, whose company is DTLA Development, says his $80 million offer is a better deal because it would allow Revel to collect $10 million from Straub from his earlier bid.

Burns said she would reconvene the proceedings next Thursday.

As long as there is "an inkling of interest" from other bidders, Burns said, she cannot conclude that the sale to Straub "is in the best interest."

The emergency hearing to approve the sale to Straub - which has a closing date of March 31 - was marked with intrigue, as Shomof and three partners arrived at the last minute, dressed in jeans, basically on the way back to the airport. They said they had been allowed to tour Revel.

Shomof's attorney, Kurt Gwynne, said his client had received a letter Tuesday from a Straub attorney, Larry Zinc, that threatened litigation if Shomof did not "cease and desist" from contact with Revel, its tenants, or the news media, which had reported his interest the day before.

"Obviously, we're not intimidated," he said.

All parties appeared to acknowledge the letter was improper in a bankruptcy proceeding. Straub declined to comment after the hearing.

Gwynne said that the judge's delay of a week was "an aggressive timetable" but that his clients remained interested in the property, which they said they would likely turn over to an operator and retain tenants such as HQ Nightclub. They have also been engaged in talks with ACR Energy Partners.

Leo Pustilnikov, a partner of Shomof, said in a text from Philadelphia International Airport that the judge's delay was "wonderful."

But Tom Kreller, attorney for Wells Fargo Bank, the financer for the bankruptcy, urged the judge to "lock in" Straub's $82 million bid and said Wells would not guarantee funding if the judge delayed approval. Wells has spent $143 million financing the 16-month process and stands to recoup most of any proceeds.

In late-afternoon testimony, Shaun Martin, the $495-an-hour chief restructuring officer for Revel, said the company would continue to entertain other offers before the scheduled March 31 closing date, even if the judge approved the Straub sale.

But Martin and the investment banker marketing Revel, Ramy Ibrahim, stressed that Straub's offer was the first to put money in escrow. "This is the first time we've had a path to the goal line," Ibrahim said.

Gwynne argued that there was no risk involved in delaying approval. "Continuing this hearing does not give an out to Polo North," he said, referring to Straub's company.

The Revel witnesses said they feared a conversion of the case to a Chapter 7 liquidation. Ibrahim said Revel had been approached with offers for "furniture, fixtures, slot machines" that didn't come close to $82 million.

An earlier agreement with Straub for $95.4 million was nixed at Revel's request. A first agreement with Brookfield Holdings for $110 million was aborted after Brookfield was unable to reach an agreement with ACR Energy Partners, the company that operates the plant that powers Revel.

Ibrahim testified that Revel had hoped to sell the property for $200 million.

Stuart Moscovitz, the attorney for Straub, dismissed the seriousness of the Los Angeles developer. "You have no bond, no guarantee, nothing submitted to the court," he said. "It's illusory."

He also opposed the delay of the judge's approval and said it would devalue the property. He said Straub needed to be in a position to be able to assure himself that "if things don't work out with ACR," he could find another way to supply power to the Revel building.

Shomof said the group wants Revel. "We love it, that's why we're very interested," Shomof said.