- Late last year, Rational agreed to purchase the struggling Atlantic City casino for a reported $50 million.
- Attempted termination of binding agreement deemed illegal.
- “This step has been taken to protect Rational Group’s rights and interests under the purchase agreement and reflects the Group’s desire to complete the acquisition of the Atlantic Club.”
PokerStars’ parent company Rational Group filed a lawsuit in New Jersey Monday against the owner of Atlantic Club Casino. Rational asserts that the alleged termination of their agreement to purchase the property with Rational is illegal.
According to the lawsuit, PokerStars alleges that Resorts International and other defendants are guilty of “breach of contract and bad faith” in the “purported termination” of the purchase of the troubled casino property.
Rational attorneys also filed for a temporary restraining order (TRO) in the case, blocking Resorts International from executing any other sales agreement or transaction connected to the Atlantic Club. The request for the TRO was immediately granted by Judge Raymond A. Batten.
The lawsuit, filed on behalf of Rational by the New Jersey law firm of Lum, Drasco and Positan, names several defendants in the action in addition to Resorts International: Eric Matejevich, Irwin Apartment Trust, Michael Frawley, RIH Acquisitions NJ LLC, and RIH Propco NJ LLC.
Late last year, Rational agreed to purchase the struggling Atlantic City casino from Resorts International Holdings, contingent upon Rational being approved to operate a casino in New Jersey. The deal was expected to protect between 1,800 and 2,000 jobs at a property that is in risk of being shuttered.
According to the lawsuit, the attempted cancellation of the deal is itself illegal. Stars’ attorneys cited the New Jersey Casino Control Act, N.J.S.A. 5:12-95.12(a) in asserting that no casino purchase in progress can be cancelled once an application for casino operator approval has begun.
The application in the name of Rational US was only recently declared complete by New Jersey regulators, leading to the assertion that the expiration-date included in the original purchase can not be enforced.
The lawsuit alleges that Resorts International’s decision to terminate, communicated on April 27, also came just one day after Resorts proposed a modest 10-day extension to the deal, in exchange for an extra $6 million payment. This would likely also be rendered as a moot proposal if the court upholds Rational’s and PokerStars’ claims.
Resorts International, according to the complaint, also asked for a $4 million termination fee regarding the purchase agreement, which when added to $11 million already paid by PokerStars would equal the complete, original $15 million sales price for the property.
In the complaint, Stars’ attorneys describe this as follows: “Should Rational comply with this demand, Rational would have paid the entire purchase price, and received exactly nothing in return.”
Rational Group’s Head of Corporate Communications, Eric Hollreiser, issued a brief statement in conjunction with the filing of the lawsuit and the obtaining of the restraining order.
According to Hollreiser, “The Rational Group (d/b/a PokerStars) today filed a lawsuit in New Jersey Superior Court seeking to restrain the sellers of the Atlantic Club Casino and Hotel from continuing to breach the purchase agreement which was entered between the Rational Group and the seller (who are led by Colony Capital LLC) in December 2012. This step has been taken to protect Rational Group’s rights and interests under the purchase agreement and reflects the Group’s desire to complete the acquisition of the Atlantic Club.”
“The Rational Group remains entirely committed to resolving this situation, and to its investment in New Jersey, while it continues to diligently work on completing the required licensing process,” the statement concludes.
An initial hearing in the matter has been scheduled before Judge Batten at 1:30 PM on May 17.
