Not over till it's over: Bankruptcy court to consider Revel sale, but sides can still back out

A bankruptcy court judge will consider — yet again — the proposed sale of Atlantic City's former Revel Casino hotel to a Florida developer.

But the $82 million deal has loopholes that could let the owner, Revel AC, or the purchaser, Glenn Straub, back out before it is due to close March 31.

The latest sale agreement between Revel and Straub's Polo North Country Club contains a "fiduciary out." It is language that gives Revel the right to scrap the Straub deal if a higher offer presents itself before the deal closes.

That is crucially important this week with a new potential purchaser, Los Angeles developer Izek Shomof, planning a bid for Revel after touring the property last week. A hearing to consider the proposed sale is set for Thursday.

Last week, Judge Gloria Burns considered a motion by Revel to approve the sale to Straub, but she postponed the matter for another week, in part to give Shomof or other interested parties time to prepare better offers for the $2.4 billion casino. She said she gave the additional time to determine "if there is something else out there."

There could well be. Shomof's partner, Leo Pustilnikov, said their company, DTLA Development, would submit a formal bid for Revel next week. And a lawyer for the company, Kurt Gwynne, said DTLA would honor the leases of former business tenants at Revel, including celebrity restaurants and nightclubs.

Opposition from these businesses has greatly complicated efforts to sell Revel. They say they have invested millions in the property and would be wiped out if they were not permitted to continue in a reopened casino. Appeals of prior Revel sale orders approved by Burns have been working their way through the federal courts.

The $82 million agreement marks the third time Revel has had a proposed sale. A $110 million deal to Toronto-based Brookfield Asset Management fell apart in November. Straub's $95.4 million deal died when he missed a Feb. 9 deadline to close on it. Last month, Straub and Revel inked the current $82 million deal.

Straub also has an out in the deal: If ACR Energy Partners, its sole source of utility service, cuts off service before the deal closes, Straub can walk away. ACR is demanding assurance its bills will be paid, and it has been a strenuous opponent of the proposed sale.

In the meantime, other potential buyers can step up. Ramy Ibrahim, a senior vice president with Moelis & Co., the investment banking firm handling expressions of interest in Revel, said 250 potential buyers were spoken to and 46 toured the property over the last 16 months.

"It has been the most marketed casino asset in the U.S.," he said.

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Wayne Parry can be reached at http://twitter.com/WayneParryAC