Revel creditor ACR eyes case conversion, cites ‘flawed’ sale agreement

By Caroline Salls

Pittsburgh, Feb. 25 – Revel AC, Inc. creditor ACR Energy, LLC asked the U.S. Bankruptcy Court for the District of New Jersey to convert the company’s Chapter 11 bankruptcy case to Chapter 7, according to a Wednesday court filing.

ACR said Revel’s goal to complete a quick asset sale process has largely failed, as the company is now accepting a sale price reflecting a reduction of more than 35% of the price previously approved by the court.

“The debtors’ sale efforts, which had failed for six months prior to the petition date and have now included two additional failed sales processes within the past two months, are merely the latest, but not least, troubling development in these cases,” ACR said.

“The debtors’ stewardship has saddled the estates with tens of millions of dollars of wholly unnecessary costs and a [debtor-in-possession] loan that guarantees that tens of millions of dollars of legitimate claims, including those of ACR Energy, will go unpaid.”

Despite this, ACR said Revel continues “to advance the interests of the DIP lender to the detriment of the estates’ creditors, pushing toward a sale of the debtors’ assets through a hopelessly flawed purchase agreement, on an expedited timeline.”

In addition, ACR said a proposed claim settlement between Revel, the DIP lender and the company’s official committee of unsecured creditors “demonstrates a gross breach of the debtors’ fiduciary obligations.”

According to the motion, all of these steps taken together will result in the DIP lender guaranteeing itself all proceeds of an eventual sale without paying in full the costs of the administration of these cases and with no further contribution, “save for a pittance thrown at unsecured creditors, who will in reality see nothing.”

ACR said the sale and compromises will leave the estates wholly insolvent and leave administrative creditors with nothing.

The creditor said not only will it lose $20 million on top of the $12 million it lost before Revel’s bankruptcy filing, but it has also been coerced into providing financing to the estates “and is now being subject to the handcuffs inserted into the latest version of an oppressive purchase agreement.”

Revel, an Atlantic City-based gaming and entertainment company, filed for bankruptcy on June 19, 2014. The Chapter 11 case number is 14-22654.

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