Bank says Revel power plant company in danger of failing
ATLANTIC CITY (AP) — A dispute over utilities that is keeping Atlantic City's former Revel casino from reopening is getting worse.
Its lender says the power plant providing limited electricity to Revel is in danger of failing because it is not being fully paid for the service.
Bank of New York Mellon is seeking to intervene in a federal lawsuit between ACR Energy Partners and Florida developer Glenn Straub's Polo North Country Club, the casino's new owner. Under a temporary arrangement, ACR is providing limited power to the building, and Straub is paying the bank. But the bank says ACR is not being paid the full rate, and as a result, is operating at a loss.
The bank, which is the trustee for $119 million in bonds owned by ACR, says the utility company is operating only by drawing on the bank's collateral, which may soon be cut off.
"At present, ACR's viability as a going concern is in serious jeopardy," bank attorney Guy Amoresano wrote in a Thursday court filing. "While the bondholders have thus far permitted BNYM to allow the use of its cash collateral to fund continuing operations, the bondholders anticipate that they may be forced to withhold consent in the near future, particularly if ACR and Polo North do not come to an agreement concerning ACR's provision of energy to Revel that contains commercially reasonable terms and provides for full compensation to ACR for the power it supplies Polo North."
Straub's lawyer, Stuart Moskovitz, said Polo North is paying "the full amount agreed to by the parties. Obviously that doesn't cover the bond service, but it is the full amount to which the parties agreed and covers all costs, overhead and profit."
An ACR lawyer did not immediately respond to a request for comment Monday.
Straub bought Revel, which cost $2.4 billion to build, out of bankruptcy court on April 7 for $82 million. Two days later, ACR cut off utility service to the building in the absence of a contract to provide future service.
But city officials began fining Straub for not keeping fire detection and suppression systems energized, and the state Department of Community Affairs ordered ACR to keep providing power to the complex to prevent a catastrophic fire or plane crash.
In recent weeks, ACR has been providing a limited amount of electricity to keep critical safety systems energized, but it has not been providing cold water to air condition the premises since early April, claiming Polo "would not pay anything" for it.
Also last week, a federal judge ruled that Straub must permit the company that ran the former outdoor HQ pool and day club access to the property to begin preparing to reopen the club, even if the casino and hotel remain shut.
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