The ongoing saga of Revel's bankruptcy is something we've covered extensively in Today's News, as has LVA business blogger David McKee, via Stiffs & Georges. Now we can report that the whole situation has just taken yet another twist, which makes your query particularly timely.
Back in September 2014, we addressed the implications of a casino closing, in terms of the rights of those businesses that happen to be leasing space within the property at the time (see QoD 9/15/2014). As we learned back then, it's a situation that has not arisen, to date, in Nevada, but has become a significant factor with the recent closures in Atlantic City.
Although Trump Plaza closed on September 16, its tenant Rainforest Café fought against being forced out, maintaining that the restaurant was still operating as a successful business with a valid lease. After a legal battle with parent company Trump Entertainment Resorts, a federal judge ruled that the lease could be reworked to allow the restaurant to continue operating for the next 20 years. Under the new terms, Rainforest Café must build walls separating itself from the shuttered Trump Plaza, take over control of the trash service, and maintain the roof above the restaurant, among other obligations.
In the case of Revel, there are several tenants who have taken up the same cause and, following a ruling from a federal appeals court Friday, the whole sale of the resort (which has already fallen through once) could once more be in jeopardy. The three-member 3rd U.S. Circuit Court of Appeals panel in Philadelphia ruled 2-1 in favor of IDEA Boardwalk, which owns and operated HQ Nightclub and two bars at Revel, that their rights and those of other affected businesses cannot be stripped until their appeal has been heard. Revel buyer Glenn Straub wants the sale completed by Monday, Feb. 9, and is threatening to pull out and forfeit his $10 million deposit if the transaction is stalled any further. He bought the resort for $95.4 million on condition that it would be "free and clear" of any such "baggage" or debts.
Like Rainforest Café, HQ Nightclub has its own separate entrance/exit, which makes it pretty independent of the defunct "parent" business, in logistical terms, and theoretically viable as an ongoing business. However, while the last we heard was that the former would be setting up its own utility systems in order to be able to operate independently of Trump Plaza’s infrastructure, in the case of HQ it's more complicated, since Revel's on-site utility provider -- and tenant -- ACR Energy Partners, is among the interested parties fighting the bankruptcy and is threatening to cut off all power and water supplies to the building over unpaid bills. While the threat was not carried out by last Thursday's deadline, that's just a temporary reprieve until yet another appeals hearing takes place on Feb. 11. In the event that ACR Energy fails to find satisfaction and goes through with the promised disconnection plan, that would effectively render moot any chance of HQ, or any other Revel tenant, reopening, with the danger of mold growth and frozen pipes cited as a likely consequence, on top of the obvious problems that would result. IDEA Boardwalk claims it invested $16 million into HQ and the bar and beachclub that it built at Revel.
In light of Friday's ruling, early Saturday ACR filed an emergency motion arguing that the stay, pending appeal, granted to IDEA Boardwalk should apply to its situation, too, since "the same law and very similar facts exist with respect to ACR's appeal."
Meanwhile, lawyers for a separate group of "amenity" tenants that have been fighting the terms of the bankruptcy since the outset, also filed their own emergency motion, similar ACR's. Our understanding is that this third group of dining, nightlife, and retail tenants (which, together with IDEA Boardwalk, collectively employed some 800 workers), includes: Amada Restaurant, American Cut steakhouse, Azure by Allegretti, Core Casino store, Core Departures store, Core Lobby store, Distrito Cantina, Exhale Atlantic City, Ivan Kane’s Royal Jelly Burlesque Nightclub, Lugo Italian, Luke’s Kitchen and Marketplace, Mussel Bar and Grille, Village Whiskey, and Yuboka, which collectively are objecting on the grounds that they were not invited to have any say in the sale process and cannot legally have their leases canceled just because the hotel-casino failed. While some of these tenants may simply be seeking financial restitution, our understanding is that Royal Jelly at least was also a successful venue in its own right and, like HQ, would like to continue to operate.
Next week should see further developments, if not necessarily a conclusion, so stay tuned to Today's News for updates.
