Dec. 24–CAMDEN — A federal judge Monday approved a plan allowing two competing casino operators to shutter Atlantic Club Casino Hotel despite protest from an opposing bidder that would have kept the property open as a hotel.
Under the plan approved in U.S. Bankruptcy Court in Camden, Tropicana Entertainment Inc. and Caesars Entertainment Corp. will pay a combined $23.4 million for the property in a deal that will strip the casino of its gambling equipment and leave more than 1,600 people out of work Jan. 13.
Meanwhile, Monday’s proceedings revealed that Sobe Holdings, LLC, a Florida-based firm with ties to a company that sought to purchase Trump Plaza Hotel and Casino earlier this year made a slightly higher bid for the property at more than $24 million with plans to operate the property as a counterpart of the Deauville Beach Resort in Miami. The bid was not selected after a bank involved in the auction raised questions about Sobe’s ability to close a sale, attorneys said.
None of the four qualified bids received for Atlantic Club included plans to keep casino operations under way, Michael Sirota, an attorney representing the Atlantic Club, told the court Monday. Court documents state that four parties submitted qualified bids but only three parties — Tropicana, Caesars and Sobe Holdings — took part in the auction.
“It’s not lost on me that a lot of people are losing their jobs,” Chief Justice Gloria Burns said before approving the arrangement.
Burns’ approval followed an extensive objection from Sobe, represented by Philadelphia-based attorney David Braverman. Cuban-American businesswoman Belinda Meruelo is the head of Sobe Holdings. She is also the mother of Alex Meruelo, whose Downey, Calif.-based investment firm, the Meruelo Group, nearly purchased Trump Plaza for $20 million before billionaire investor Carl Icahn blocked the sale this year.
In concert with an objection to the sale filed late Sunday night, Braverman argued that Caesars was not a qualified bidder based on the company’s financial conditions and debt covenants that would prevent the company from purchasing the property.
An attorney for Caesars told the court he would not dignify the argument with a response.
Braverman called on the court to vacate the proceedings and send the property out for rebid, to which Burns replied, “No.” Those concerns should have been addressed during the auction process, she said.
“At this point, the horse is out of that barn,” Burns said, adding that only concerns of collusion or fraud in the bidding process could be addressed by the court Monday.
Tropicana Entertainment and Caesars Entertainment have agreed to pay a combined $23.4 million for the casino, with Tropicana paying for the slot machines and gaming equipment for $8.4 million. Caesars will take the property for $15 million but does not plan to keep it in operation.
Other objections to the sale, including an objection filed by UNITE HERE Local 54, were also addressed in court. Attorneys said the casino and the union came to an agreement this weekend that will allow each of the 750 union employees, more than a dozen of whom were present for the hearing, to receive $1,500 severance and vacation-time payments. The employees can also keep what has been accrued in their pension plans.
New Jersey Division of Gaming Enforcement Director David Rebuck acknowledged the difficult situation for the employees.
“We realize this is a difficult time for the employees of Atlantic Club and all those who have been part of the history of their operation,” Rebuck said. “The Division will work with Atlantic Club to ensure an orderly shutdown of casino operations.”
The Atlantic Club accounts for more than 800 hotel rooms in the city. Some have expressed concern that shuttering the property will affect the city’s ability to attract large-scale conventions with hotel rooms disappearing from the city’s inventory.
Casino Control Commission Chairman Matthew Levinson issued a statement to the contrary Monday, following the court’s approval.
“No one likes to see a business close, but we are optimistic that market consolidation will result in a stronger and healthier hotel and casino industry in Atlantic City,” Levinson said.
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