Revel Oceanfront Resort in Atlantic City Leans Towards Bankruptcy
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Revel Oceanfront Resort in Atlantic City Leans Towards Bankruptcy

December 13, 2012

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Revel, the crown jewel of the oceanfront resort scene in Atlantic City, warned federal regulators earlier this month that it might have to file bankruptcy to stop foreclosure, according to a report from The Star-Ledger.

In a recent statement, Revel’s owners admitted that their new resort holds a total amount of debt worth more than $1.3 billion, and they fear their financial problems will continue to grow as their revenues remain stagnant.

The casino and resort, which was built for the exorbitant price of $2.6 billion, has failed to capture its financial footing since its much-anticipated opening this spring. Sources say that Revel has lost a total of $168.3 million since it opened, according to documents it filed with the SEC.

To make matters worse, Revel reportedly owes more than $12 million in back property taxes, and Atlantic City officials have told reporters that they are considering claiming the property in order to meet the debt.

Sources also note that municipal authorities have filed three separate lawsuits against Revel in an effort to collect the unpaid taxes. By filing for bankruptcy, however, Revel will be able to take advantage of the automatic stay, which will put a temporary halt to both the collections lawsuits and the threatened foreclosure.

But the troubles plaguing Revel could be a result of broader economic factors, rather than simple mismanagement on the part of the resort’s owners. Industry observers say that, thanks to increasing competition from casinos in other locales, Atlantic City is no longer the favored spot of the eastern seaboard’s gambling enthusiasts.

In addition, Hurricane Sandy’s recent rampage through the area had a terrible effect on the resort’s finances. Despite these negative trends, company officials remain steadfast in their desire to keep the resort running.

According to Revel’s chief executive, Kevin DeSanctis, the resort plans to borrow more money this winter after running through an emergency $100 million loan it received in August. In addition, Revel is reportedly looking to replace many officials in core leadership positions.

Without an extra loan, however, the company could face "important consequences," such as a foreclosure on its property, according to a filing with the SEC. If foreclosure becomes a reality, many observers expect Revel to pull the trigger on a bankruptcy filing.


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