With a top bid of $98 million from the Toronto real estate investment firm Brookfield Asset Management, lawyers for Atlantic City’s closed Revel Casino Hotel were considering late Tuesday whether to adjourn the casino’s bankruptcy auction until Monday.
Brookfield, which owns two casinos, Hard Rock Hotel Casino in Las Vegas and Atlantis Paradise Island in the Bahamas, was competing with Florida investor Glenn Straub, whose $90 million offer set a baseline for the auction.
The $98 million bid by Brookfield – which amounts to 4 percent of the $2.4 billion cost to build Revel – topped a $95 million offer Tuesday by Straub, who will receive a $3 million breakup fee if he loses the auction.
The discussion of pausing the auction until next week was just one more twist in a sales effort that has been anything but run-of-the-mill.
The auction started last Wednesday, but was adjourned after six hours because of the start of a Jewish holiday. It was to resume Tuesday at 10 a.m.
Meanwhile, lawyers for Straub filed a motion Monday seeking another delay, alleging that there has been too little transparency in the sales process.
Then, Tuesday morning, just as the sale was scheduled to resume, Revel’s lead bankruptcy lawyer, John K. Cunningham, revealed in a court filing that Brookfield was among the bidders.
That notice came in a declaration lawyers must make about potential conflicts of interest. Cunningham’s firm, White Case L.P., represents Brookfield in a joint venture in India, the filing said.
Brookfield has nearly $200 billion in assets under management, according to its website. Its division that owns Hard Rock and Atlantis holds $53.4 billion in property, most in the United States.
Late Tuesday afternoon, an attorney for the Official Committee of Unsecured Creditors, Michael D. Sirota of Schotz, Meisel, Forman Leonard P.A., disclosed that his firm also represents Brookfield.
The disclosure of Brookfield’s involvement by Cunningham raised a question about whether Brookfield had submitted a qualified bid by the official Sept. 23 deadline. If so, it’s not clear why Cunningham did not make his disclosure until Tuesday.
Cunningham did not respond late Tuesday to an e-mailed request for comment.
If Cunningham accepted the Brookfield bid after the deadline, there has to be good cause, according to an expert with experience in such auctions.
Other aspects of the auction are also unusual.
Typically at the start of an auction – in this case, last Wednesday – the lawyer running the auction would have told all the bidders how many qualified bids had been received by the deadline before meeting privately with bidders to establish a common baseline for bids that have different payment provisions.
According to Stuart J. Moskovitz, Straub’s attorney, none of that was done. “The lack of transparency here is unheard of,” Moskovitz said.
Cunningham said last week that he was following proper procedures.
Straub’s motion, dated Monday but not entered on the docket until Tuesday, requested a delay in the auction until 9 a.m. Thursday, for copies of any other bids that were received, and for the U.S. trustee to conduct the auction rather than Revel’s bankruptcy attorney.
Federal trustees, who are U.S. Department of Justice officials who monitor bankruptcies, never conduct auctions. Also, Straub’s company, Polo Country Club North Inc., does not likely have the standing it would need in bankruptcy court to make such demands.
During a Sept. 15 Revel bankruptcy hearing, Judge Gloria M. Burns told Moskowitz that the bidder did not actually have standing in court.
She accepted input from Straub on the scheduling of the auction, though, because of the desperate state of the months-long effort to sell Revel, which had generated just a single bid, Straub’s.
Article source: http://www.philly.com/inquirer/business/20141001_Revel_casino_bidder_seeks_auction_delay.html
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