CAMDEN - 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, at $82 million.
Burns said the delay would she allow consideration of other offers, notably an 11th hour offer from Los Angeles developer Izek Shomof, who flew into Atlantic City this week to make his own offer of $80 million.
"Why not give it a little more time," Burns said to a courtroom of lawyers. "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 actually a better offer because it would still allow Revel to collect $10 million from Straub from his earlier aborted bid.
Burns said she would reconvene the proceedings on March 12.
As long as there is "an inkling of interest" from other bidders, Burns said, she cannot conclude the sale to Staub "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 earlier.
Their attorney Kurt Gwynne said they had received a letter from a Straub attorney, Larry Zinc, that threatened litigation if Shomof did not "cease and desist" contact with Revel, its tenants or the news media. All parties appeared to acknowledge the letter was improper in a bankruptcy proceeding. Straub declined comment after the hearing.
Gwynne said the judge's delay of a week was still "an agressive 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 the Philadelphia airport that the judge's delay was "wonderful."
But Tom Kreller, attorney for Wells Fargo, the financer for the bankruptcy, urged the judge to "lock in" Straub's $82 million bid and said Wells Fargo 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 a 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 that put actual money in escrow.
"This is the first time we've had a path to the goal line," Ibrahim said.
But Gwynne argued there was no risk involved in delaying approval. "Continuing this hearing does not give an out to Polo North," he said.
The Revel witnesses said they feared a conversion of the case to a Chapter 7 liquidation. Ibrahim said they'd 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 which operates the plant that powers Revel.
Ibrahim testified that Revel had initially hoped to sell the property for $200 million.
Stuart Moscovitz, the attorney for Straub, dismissed the seriousness of the LA developer's intent. "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 cautioned it would "devalue" the property. He said Straub needed to be in a position to be able to assure himself "if things don't work out with ACR" that the Revel building could be powered another way.