Revel Aims to Secure a Buyer to Prevent Shutdown--Week Ahead
By Sara Randazzo
In the coming week, the biggest ticket in bankruptcy court will be watching to see if Revel Casino Hotel in Atlantic City, N.J., can secure a buyer to keep it from closing down and laying off thousands of employees.
The casino entered into Chapter-11 proceedings for the second time in June, with plans to sell itself to its secured lenders through a credit bid, which would forgive some of its debts but would leave little for unsecured creditors.
Revel owes $137 million to first-lien lenders led by J.P. Morgan Chase and another $310 million to a group of junior lenders led by Wilmington Trust. Both lender groups are slated to share in Revel's available cash, including sale proceeds, under the Chapter 11 plan the company filed along with its bankruptcy petition.
Wells Fargo & Co. ( WFC ) is providing Revel with $125 million in bankruptcy financing, the bulk of which will be used to pay off $83 million in existing debt.
If competing bids come in by Monday's deadline, the casino will hold an auction Aug. 7 and seek approval of the sale the following day in U.S. Bankruptcy Court in Camden, N.J.
Revel told its some 2,000 employees at the start of its bankruptcy case that if it is unable to find a buyer, the facility would be forced to close and all employees would be terminated by Sept. 1.
Built at a cost of $2.4 billion, Revel stumbled almost immediately after opening in April of 2012 and filed for bankruptcy protection for the first time less than a year later. It emerged in May 2013 under the control of its lenders, after having slashed more than $1 billion in debt off its books.
Meantime, S.B. Restaurant Co., owner of the Elephant Bar restaurant chain is also looking to sell itself at auction. The bidding was initially scheduled to take place on Monday, but the company requested a few more days to negotiate " with certain prospective bidders," according to filings in U.S. Bankruptcy Court in Santa Ana, Calif.
Under the new requested time frame, bids for the company, which is in Chapter-11 proceedings and also runs Wok Kitchen restaurants, will be due on Wednesday, with an auction on Aug. 11.
Costa Mesa, Calif.-based S.B Restaurant already has an offer from its biggest lender, a group of investors led by Cerberus Business Finance LLC. The lender group isn't offering cash. Instead, it is proposing to use $12 million of its roughly $27.4 million loan as currency at the auction. At the time of its Chapter-11 filing in June, the company operated 29 restaurants and employed 2,500 workers, court filings show.
Elsewhere, the operator of Silver Jeans retail stores goes to court on Monday in Wilmington, Del., to win approval to close its stores and abandon some of its property. SJC Inc., which runs the Silver Jeans brand's five retail stores in Texas, California and Illinois, plans to close down by Aug. 31. The company blamed its recent fall into bankruptcy proceedings on a slow economy and competition from denim brands like Lucky and True Religion.
The retailer proposes hiring Hilco Merchant Resources LLC to execute its going-out-of-business sales. Hilco has promised to pay 35% of the value of most of the company's merchandise, regardless of what amount of money is collected from the store-closing sales.
The Silver Jeans brand itself is unaffected by the bankruptcy. The brand will continue to be sold at retailers like Buckle, Macy's, Maurices and Dillards.
-Patrick Fitzgerald, Tom Corrigan and Katy Stech contributed to this article.
Write to Sara Randazzo at email@example.com
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