- Since rejecting the Rational Group’s attempted purchase, the fortunes of the Atlantic Club Casino Hotel in New Jersey have gone from bad to worse. Now even the sale of the business in a bankruptcy court has hit problems.
- After two days of auction, no buyer has been agreed, and the unions have stepped in claiming that the Club failed to consult with them as required under federal law.
- Had the Club proceeded with its sale to the Rational Group, it could have expected $40m of investment spread over five years.
Since rejecting the Rational Group’s attempted purchase, the fortunes of the Atlantic Club Casino Hotel in New Jersey have gone from bad to worse. Now even the sale of the business in a bankruptcy court has hit problems.
The Club was offered for sale by auction, expecting to have a buyer in place for judicial approval today. However, after two days of auction, no buyer has materialized, the court hearing has been postponed until Monday and the unions have stepped in claiming that the Club failed to consult with them as required under federal law.
Local 54 of Unite-HERE asked the judge to stop the sale if it does not include continued contract terms for hotel employees.
After the Club filed for bankruptcy at the beginning of November, a Wall Street Journal article stated that an un-named hedge fund had put up $15m to keep it running in advance of a sale. The price that the Club will now fetch may mean the hedge fund will not get its money back.
Had the Club proceeded with its sale to Rational, it could have expected $40m of investment spread over five years. The deal would have protected between 1,800 and 2,000 jobs and reports suggested a sale price of around $50m.
In hindsight that would have been a great deal for the Club’s owners, California hedge fund Colony Capital LLC. The suspicion must be that greed over potential internet revenues caused them to seek a better deal elsewhere. Such a deal never materialized, and the Club’s continuing losses—$2.3m in the second quarter of 2013—finally led it into bankruptcy.
After the second day of the bankruptcy auction failed to identify a buyer, there was no note of optimism from the Atlantic Club’s Chief Operating Officer Michael Frawley: “All I can say is the process is continuing.”
