We’ve not heard of such a scenario in Las Vegas but it is playing out quite a bit in Atlantic City, where Revel and the Showboat both closed very recently [Ed: This question was submitted just prior to Revel's closure], and Trump Plaza is closing (possibly to be followed by cash-strapped Trump Taj Mahal). IDEA Boardwalk, which owns HQ Nightclub and two other entertainment venues at Revel, is petitioning the bankruptcy court to be allowed to stay open, despite the closure of Revel itself.
IDEA insists that its operations were profitable, regardless of the under-performance of the hotel-casino. Wrote Wayne Parry of The Associated Press, "it was not clear whether the judge would have the authority to order the club to reopen without permission of Revel Entertainment Group." (At press time, Revel was sold to a Florida real estate developer, so HQ Nightclub’s concerns may shortly become moot.)
Similarly, Rainforest Café in Trump Plaza has filed suit against its landlord, seeking a 90-day stay of what would be a Sept. 16 closing. This is not as impractical as it sounds, as the restaurant’s primary entrance and exit is right onto the Boardwalk, not through the casino. (It is the same at HQ Nightclub.) Owner Landry’s Inc. is seeking a three-month reprieve so that it can hook up its own utility systems and then operate independently of Trump Plaza’s infrastructure.
"It’s a really complex question," says Nevada Gaming Control Board Chairman A.G. Burnett, adding that the tenants’ rights would depend on their lease. "Nothing like that’s happened here," he notes, so Nevada provides no helpful precedent. Complicating this issue still further, Trump Entertainment Resorts is filing for Chapter 11 bankruptcy and, as Burnett says, "A bankruptcy’s like a [dead] animal. The vultures come to pick off the flesh" … and tenants have to take their place in the queue as unsatisfied creditors.
We also put the issue to bankruptcy attorney Jeffrey Silver, who confirmed that the lease is the relevant document. But, he notes, "you’ve got to keep the power on, keep the security up … draining the estate" of Trump or Revel. "If there’s a provision in the lease" for dealing with a closure, "that’s one thing, but usually the tenant is in a much poorer position, so they become a creditor just like anywhere." Chapter 11 debtors also have a 60-day prerogative to reject leases. "If they choose to allow that entity not to continue, they can just say, ‘get out.’" The tenant’s best resort would be to file for a wrongful termination, the damages predicated on the profits it expected to make, Silver says.
Finally, we turned to Kerry Langan, public information officer for the New Jersey Division of Gaming Enforcement, who could shed but little light on the issue. "It is my understanding all issues between the casinos and the third party vendors are settled through the courts," she wrote us. So the answer to your question would seem to be that if a third-party vendor wanted to stay open in a defunct casino, they’d have to settle the issue in court, regardless of the circumstances.
