PHILADELPHIA (CN) – The Third Circuit added another kink to the troubled sale of Atlantic City’s Revel casino Wednesday, refusing to sever a former nightclub’s lease.
Idea Boardwalk had a $16 million lease with Revel before the casino, built for $2.4 billion in 2012, filed for bankruptcy and turned off its power after just two years in business.
After a federal bankruptcy judge let Revel sell its assets, including its Idea lease, free and clear of any other interests, a protracted auction process ensued.
The casino ended up recouping $82 million in assets and selling the property to developer Glenn Straub.
Though a federal judge refused to let Idea stay the sale, the Third Circuit found 2-1 Wednesday that removing Idea’s interest would cause the company “irreparable harm” by ending its business.
Revel failed to persuade the majority that the closure of the casino rendered Idea’s operability a moot point.
Finding that Idea could feasibly continue without the Revel, Judge Thomas Ambro wrote for the majority that “there is nothing in the record to refute Idea’s contention that it can operate independently of the casino.”
Judge Patty Shwartz wrote in dissent that Idea’s continued operation confers no public interest, a criterion she said is fundamental in the decision to grant a stay. “Revel faced difficulties securing a buyer, and having one in hand would certainly serve the public interest,” she wrote. “At the time, it appeared that allowing the sale to proceed quickly would lead to the reopening of a large facility, which had employed (and would likely again employ) thousands of people.”
The battle with Idea is one of many involving by Revel and Straub, having also been sued by investors and other tenants.
Last month, a federal judge awarded Revel’s attorneys $17.8 million in connection to the bankruptcy.
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