The Revel Casino Hotel in Atlantic City, a $2.4 billion property that has operated at a loss since opening in 2012, filed for its second bankruptcy Thursday.
The new filing came about 13 months after the company wiped out $932 million in debt and cut yearly debt payments by 96 percent in bankruptcy last year.
Despite the massive debt relief, the casino at the north end of the Boardwalk continued losing money on an operating basis before debt payments. The loss was $21.75 million in this year's first quarter.
Revel said it would continue operating during bankruptcy and expects to conduct a court-supervised auction of its assets.
"Today's announcement follows an extensive strategic review," Scott Kreeger, Revel's president and chief operating officer, said. "We will work to reach an agreement with a new owner who will help ensure Revel's long-term financial stability."
However, the company also said that if it could not promptly complete a sale or find another solution, it could shut down permanently. The company warned employees that a shutdown could happen as soon as Aug. 18, a date picked to comply with layoff-notice regulations.
At the casino, business continued as usual on a not especially busy weekday evening. Employees put on their game faces and forged ahead, while some customers expressed surprise that such a beautiful place could be in danger of going under.
A recorded voice overhead urged patrons to get the "all-new Revel card - Real Benefits, Real Fast."
"It's a lovely hotel," said Catherine Allen of New York City, who was staying at Revel for a few days, her third time. "It's huge. It's different. It's a fascinating hotel. There's new technology. I hope they get out of it, because it's high-tech and it's a beautiful hotel."
"Look at this place," said another patron, who identified himself only as Frank, 67, as he pointed to the soaring ceilings of the entryway. "What are they going to do with it?"
He added that he was surprised to find there was no poker room at Revel and was unhappy at the $13 cab fare over to the Borgata. "It has the best pool, but we're probably not going to come back here," he said. "I'm not going to play the slots. I just end up at the whiskey bar."
It's not clear who will bid on the property, which was designed to mark a new era in Atlantic City. Its casino industry has been devastated since 2006 by competition from Pennsylvania and other neighboring states.
Revel, in its bid to put entertainment at center stage, broke too many casino rules, observers have said - opening as a nonsmoking facility, not offering a rewards card, failing to provide special amenities for high rollers, and opening without a database of existing customers to entice to the property.
Structurally, the casino floor was too small relative to Revel's overall size.
"Revel hasn't hit the mark," Drew Goldman, managing director for global real estate investment banking at Deutsche Bank Securities Inc., said last month at a gaming conference in Atlantic City.
"There was something fundamental that didn't work for Revel," said Goldman, who added that Kevin DeSanctis, the casino executive who spearheaded the construction of Revel, was his friend.
"Just because something was really expensive doesn't mean it's still valuable at a fraction of what it cost," Goldman said, referring to rumors this year that Revel might sell for about $300 million.
As to his clients, Goldman said: "They don't see how they can turn that around."
A shaky start
Revel came close to not being built. Construction stalled in early 2009 after a refinancing effort by Morgan Stanley, which had invested $1.25 billion in Revel, failed. The New York investment bank eventually wrote off $1.2 billion and later sold its remaining interest for $35.5 million.
Then, in early 2011, the Christie administration helped orchestrate a refinancing by securing a $261 million package of tax incentives for Revel, then just a shell. Construction resumed and the casino opened in April 2012.
No money was paid under the tax incentives, however, because Revel never made money, state officials have said.
David L. Rebuck, director of the New Jersey Division of Gaming Enforcement and the state's top gambling regulator, said, "The division will carefully monitor the situation and is prepared to thoroughly investigate any aspect of the process that might require regulatory review."
Revel AC Inc., owned by hedge funds that took over in the last bankruptcy, said it had an agreement for a $125 million loan from one of its current lenders to fund operations during bankruptcy.
If owners fail to find a buyer quickly enough and decide to close, it would mean the loss of 1,718 full-time and 1,060 part-time jobs. Revel workers voted this month to become part of Local 54 of Unite Here, which represents about 12,000 casino workers in Atlantic City.
"We believe a sale of Revel to a buyer who wants to keep the property open and retain the employees is the best thing for the workers, for Atlantic City, and for Revel, and Local 54 is committed to working with all parties to save the jobs," said union president Bob McDevitt.
A cocktail waitress on the casino floor said employees were trying to stay positive. "It's just another process, another step," she said.
A supervisor in one of Revel's restaurants said casino employees were veterans of uncertainty.
"I'm not worried," she said. "I worked for Resorts back in the day and went through the same thing. It's tough. We opened in a down economy, and with all the competition."
Still, she said, "our weekends have been phenomenal. I have a feeling it's going to go for a steal."
As word of the bankruptcy spread Thursday, there was dark humor on how low a sale price might go, with everyone from jitney drivers to bartenders debating whether they could pool their money to buy the place.