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Atlantic City's Revel Casino Files For Second Bankruptcy 16 Months After The First One

Tyler Durden's picture




 

It feels like it was only yesterday when we wrote about the plight of what was once supposed to be the ultramodern east-coast competitor to the glitzy kitsch of Las Vegas: Atlantic City's Revel casino which back in February 2013 "filed for bankruptcy ten months after opening." Well, a short 16 months later it is time for an update because Revel, which was supposed to have a viable balance sheet upon emergence from its first Chapter 11 filing, just filed for bankruptcy for a second, and most likely final time: the dreaded "Chapter 22." And not only did the company admit its business model is not viable not due to its overlevered balance sheet, but because of the sad state of the economy and the AC gambling market, it also warned it may shut down permanently if it can't find a buyer in bankruptcy court (its odds of selling may be higher if it includes the cast from the original Revel ad shown below, in the transaction).

As a reminder, and as we reported last year, as part of the first debt for equity bankruptcy exchange, Revel wiped out $1.5 billion or the bulk of its debt. Apparently, not enough, because the casino is again on the verge of liquidation a year later. 

Back in February 2013 when explaining why more bad money was being thrown after good, we said that...

...the continuation of the abandoned investment was the brainchild, and pride and glory of one Chris Christie who then said "the $2.4 billion Revel is one of the most spectacular resorts he's ever seen and expects it will motivate other Atlantic City casinos to revitalize their properties. "I think that one of the things that Revel will be is a catalyst for additional modernization and investment by the other casinos to say, listen, if we grow more people here coming to the region and we're offering something that looks nice further down the boardwalk, maybe people will want to look there as well." As it now stands, the Revel will only be a catalyst for further bankruptcies as industry after industry finds out what a tapped out consumer with no access to $1.8 trillion in excess reserves truly means.

We were right.

From AP:

In warning letters given to employees and obtained by The Associated Press, Revel said it is seeking a buyer for the struggling $2.4 billion casino, but can't guarantee one will be found. If not, employees could be terminated as soon as Aug. 18, Revel said in the letter.

 

"If Revel is unable to complete such a sale promptly, Revel expects to close its entire facility," the letters read. The company also said it plans to stay open while it searches for a buyer, operating as usual, honoring player comps and paying employees and vendors.

 

Shortly after distributing the letters, Revel filed a Chapter 11 petition with the federal bankruptcy court, its second in as many years.

Will Revel find buyers in a liquidation sale? Maybe, if the price is right. As in far, far lower than its original valuation, which as a reminder was just shy of $1 billion in equity investment by its original investor Morgan Stanley. And that of course excludes the billions in debt that has now been impaired not once but twice.

 It could not be determined how much Revel might sell for in a bankruptcy auction, but it is sure to be a steep discount. Wall Street analysts and some casino executives said last month that $300 million was too high a price for the casino. A union that has been at odds with Revel since before it opened pegged its value in April at $25 million to $73 million, based on public filings.

 

For much of the past year, Revel has sought a buyer for the property, which has remained eighth out of Atlantic City's 11 casinos in terms of the amount of money won from gamblers. But it also kept the option of a second bankruptcy filing as potential buyers expressed interest but failed to pursue a deal.

In other words, the twice bankrupt casino, that in 2007 was worth billions, and saw a $932 million investment by Morgan Stanley, is now worth between $25 and $73 million. Sounds about right for the "recovery."

Then again who could have possibly foreseen it: Revel has never been profitable since it opened in 2012. It posted a gross operating loss of $21.7 million in the first quarter this year. For all of 2013, it lost $130 million, up from the $110 million it lost during the nine months it was open in 2012.

But perhaps the biggest irony, as we pointed out over a year ago, was that in the press release surrounding the first bankruptcy, the new, now wiped out, investors were proud to point out that:

No tax payer funds will be used to finance the restructuring.

What about the second restructuring? And perhaps in retrospect, taxpayer funds should have been used: maybe only then the casino would have survived a few extra months. Or perhaps unlike the GM bailout, where it cost taxpayers only a few billion to make sure Obama would get the benefit of a few hundred thousands teamster votes, the hospitality-worker union in Atlantic City simply didn't offer enough votes for sale.

Joking aside, it is increasingly becoming the case that insolvent projects can sustain their money-losing existence only when they have taxpayer-funded generosity breathing new life into them again... and again... and again.

In conclusion, below is an artist's rendering of what Revel could have looked like in an economy that actually was recovering:

 

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Thu, 06/19/2014 - 18:50 | 4875622 rainingFrogs
rainingFrogs's picture

"... I told you I shouldn't have put everything on red" -- Revel management

Thu, 06/19/2014 - 18:56 | 4875646 SWRichmond
SWRichmond's picture

But the economy is strong, employment growth is strong, strong, strong...unemployment is low, there's no inflation, and everyone loves Obama and the Congress!  What could go wrong?

Thu, 06/19/2014 - 19:00 | 4875661 kliguy38
kliguy38's picture

Wait til City Center in Vegas goes POOF......that one will leave a mark

Thu, 06/19/2014 - 19:34 | 4875819 Jlasoon
Jlasoon's picture

$250/nightly + $50 taxes and Resort fee + $50 buffet dinner + $125 nighttime entertainment + $12/drink = one hell of a hangover.

 

No one can afford this shit anymore.  

Thu, 06/19/2014 - 19:56 | 4875923 nuclearsquid
nuclearsquid's picture

Having been there, it is a beautiful building, worth way more than 70M, if the following things weren't facts:

-no one has disposable income

-south jersey is mostly a redneck shithole

-gambling addicts in NYC and Philly aren't enough to support AC, considering they can go to closer alternatives

-Plenty of other bread and circuses

 In short, AC was only viable when it was the only game in town.

Also, the grand escalator entrance would be worthy of a breathtaking bankster suicide.  Only those who have been there will grasp the scope.

Thu, 06/19/2014 - 20:20 | 4876023 Squid Viscous
Squid Viscous's picture

yeah their plan was to attract the huge 25-35 "low roller" crowd, who demand smoke- free gambling, overpriced restaurants, and tiny rooms for $350 per weekend night...good job Morgan Stanley fucktards and whoever thought that was a good idea the first time around...AC is a dying cess-pool

Thu, 06/19/2014 - 20:53 | 4876150 wee-weed up
wee-weed up's picture

 

 

Hell, who's running that clusterfuck?

The Obozo Admin?

 

Wait...

Thu, 06/19/2014 - 22:36 | 4876588 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

Who the hell needs to go to a physical casino. Throw all you money into high flying tech stocks and you'll be wealthy. right? Best gambling around.

Fri, 06/20/2014 - 08:03 | 4877330 oklaboy
oklaboy's picture

you mean the 1 in 3 25-34year olds living with their parent because of student debt?

Thu, 06/19/2014 - 21:00 | 4876178 therover
therover's picture

- NJ is mostly a shithole.

Fixed....and I am from NJ.

 

Thu, 06/19/2014 - 20:07 | 4875974 Flagit
Flagit's picture

 

No one can afford this shit anymore.

I just got off the phone with Meijer Customer Service. I went to the website as i have many times before, but this time, there is no search function. Actually, you can't really shop for anything. All you can really do is look at your local store ads and purchase gift cards.

If i understood her correctly, she said the level of sales volume had dropped drasticly, and they were taking the next few weeks to work on the website.

Again, Meijer website orders are soo low in volume they decided to take 1-2 months to revise the website.

If people don't have money for daily stuff, then Hell No they dont have money for casinos.

Thu, 06/19/2014 - 19:41 | 4875854 Idaho potato head
Idaho potato head's picture

Looks like since all those babes are now laid off, it's back to hookers and coke to raise GDP.

Thu, 06/19/2014 - 19:45 | 4875877 Yen Cross
Yen Cross's picture

  It's funny you say that. I know some developers that are clearing their balance sheets of Vegas. I also have a relative that's moving back to Vegas. (bad move)

Fri, 06/20/2014 - 08:35 | 4877381 PT
PT's picture

I used to think that bankruptcies were due to poor management or bad luck.  After I learnt about fiat debt money, I came to realize that bankruptcies are actually an integral part of the system.  It is the only way to transfer debt free assets to the economy and so buy a few more years before the Ponzi implodes.  Of course, this only works if assets are sold off for cents in the dollar and the debt eliminated.  I don't think that "restructuring" debt will help anything.

Casinos bankrupt?  Things have to be bad when you can't even sell false hope.  It didn't make sense until someone else here mentioned EBT cards ...

Thu, 06/19/2014 - 19:02 | 4875670 max2205
max2205's picture

The Mob is still the master of the Skim...leaving nothing of value in the end.

Thu, 06/19/2014 - 19:09 | 4875694 kchrisc
kchrisc's picture

Which mob? The gumbas?! The state?! Both?!

Thu, 06/19/2014 - 19:10 | 4875699 LetThemEatRand
LetThemEatRand's picture

The Mob, aka the Fed.

Thu, 06/19/2014 - 19:48 | 4875895 Freddie
Freddie's picture

Yeah - like all gals from Jersey look like models in Robert Palmer videos.

https://www.youtube.com/watch?v=XcATvu5f9vE

Might as well admit you are addicted to living in Weehauken, NJ

F Atlantic City and Vegas!

Thu, 06/19/2014 - 18:51 | 4875628 BringOnTheAsteroid
BringOnTheAsteroid's picture

That will be a lesson then not to hire red/green colour blind croupiers on the roulette wheel.

Thu, 06/19/2014 - 18:53 | 4875632 Rainman
Rainman's picture

Atlantic City is a steaming dump. They should have built in Macau and made a real shitload before the casinos get nationalized. Malinvestment squared !

Thu, 06/19/2014 - 19:27 | 4875774 Make_Mine_A_Double
Make_Mine_A_Double's picture

and 3 - 2 - 1....and the Chicoms will find an issue with non payment of taxable revenue or zoning violations and Sands and MGM will find their properties seized and fobbed off to Chicom insiders. No way they are leaving that money on the table for the farangs.

And when that revenue goes poof so does Vegas.

Atlantic City has been dead for decades and internet gambling should kill off the drunken Indians.

 

Thu, 06/19/2014 - 18:56 | 4875641 ptoemmes
ptoemmes's picture

Well..at least they had the good sense to not blame the weather. 

Thu, 06/19/2014 - 18:57 | 4875648 Da Yooper
Da Yooper's picture

Revel has sought a buyer for the property, which has remained eighth out of Atlantic City's 11 casinos 

 

11 Casinos in a city with the middle class shrinking by the minute

 

yep there is money to be made here

 

NOT

Thu, 06/19/2014 - 18:59 | 4875655 lakecity55
lakecity55's picture

They should take EBT!

Thu, 06/19/2014 - 19:09 | 4875692 JLee2027
JLee2027's picture

Maryland opened it's own casinos. So have other states. Atlantic City is not the Atlantic City of 5 years ago. It's a mad scramble to see who can steal from the middle class fastest before it all shuts down.

Man that is one dumbass commercial. Whoever did the ads should be bankrupt as well.

Thu, 06/19/2014 - 19:52 | 4875910 Freddie
Freddie's picture

The old white folks who go to Atlantic City are being killed off by ObamaCare in favor of O's little dreamers.

Thu, 06/19/2014 - 20:34 | 4876070 Squid Viscous
Squid Viscous's picture

I am renting a store on the boardwalk in AC, if you asked me to do it again I would rather shoot myself in the head,

but it gives my fiance something to do, she thinks she's a business woman or something, while I take the losses

Thu, 06/19/2014 - 20:50 | 4876138 Da Yooper
Da Yooper's picture

but it gives my fiance something to do, she thinks she's a business woman or something,

Let me guess

she has no clue

 

sorry

God help you

Thu, 06/19/2014 - 22:30 | 4876568 Squid Viscous
Squid Viscous's picture

lol - she's actually pretty sharp but just stuck in a dying city... state... country...etc. like the rest of us

Fri, 06/20/2014 - 08:20 | 4877357 oklaboy
oklaboy's picture

Squid, dominis nabisco cookeieeeee.....

Thu, 06/19/2014 - 18:58 | 4875651 Yellowhoard
Yellowhoard's picture

I've always wanted to own a casino.

Thu, 06/19/2014 - 18:59 | 4875652 lakecity55
lakecity55's picture

I want some of those jelly girlz.

Thu, 06/19/2014 - 19:05 | 4875680 lakecity55
lakecity55's picture

I"m tellin' ya, things are so bad, Vegas is paying people to gamble there!"

Thu, 06/19/2014 - 19:54 | 4875916 Freddie
Freddie's picture

Send Vegas and Harry Reid all of Obama's Little Dreamers. 

 

Thu, 06/19/2014 - 19:06 | 4875684 NOTaREALmerican
NOTaREALmerican's picture

There's got to be some Chinese guys with some spare copper (or was it aluminum, ah - well, what's the difference, spare metal) that would like to buy a casino.

 

Thu, 06/19/2014 - 19:22 | 4875739 BuddyEffed
BuddyEffed's picture

Not China, but my guess is Belgium will catch this falling knife, so it can juggle it with all the other falling knives it has caught.  Score!

Fri, 06/20/2014 - 09:10 | 4877513 TBT or not TBT
TBT or not TBT's picture

Maybe they would like to rehypothecate the steel and concrete in the casino.  It doesn't matter that it isn't deliverable in the strict sense.   Everybody will always settle in cash.    There is no spoon.  

Thu, 06/19/2014 - 19:11 | 4875703 Bazza McKenzie
Bazza McKenzie's picture

Surely in the interests of diversification the Fed needs a real casino on its balance sheet, one with more pizazz than stocks and bonds.

Thu, 06/19/2014 - 20:09 | 4875980 Kprime
Kprime's picture

think of the laundering possibilities, the congress or the Clintons ought to snap it up post haste.

Thu, 06/19/2014 - 21:52 | 4876394 Christophe2
Christophe2's picture

In fact, compared to gold, which earns NO INCOME, the casino is the far better collateral, clearly. :P

Thu, 06/19/2014 - 19:14 | 4875713 world_debt_slave
world_debt_slave's picture

Why risk your money at a Casino when you can play the biggest Casino of all, the stock market.

Thu, 06/19/2014 - 19:18 | 4875732 Dre4dwolf
Dre4dwolf's picture

Roullette is more fun and has better odds? ;p

Thu, 06/19/2014 - 19:23 | 4875727 Dre4dwolf
Dre4dwolf's picture

Im sorry , but that casino and club is for fruits and metro-sexuals who look like they live in that Hunger Games City, no "real" people go there lol, a drink costs like 50$ fuck that shit, id rather throw 50$ at the roulette wheel and get free drinks, everyone who goes to that place looks creepy and plastic like this http://adriancrowe.files.wordpress.com/2011/12/beyond-metrosexual.jpg, its creepy as fuck in that place, the casinos all around it are much better and more "normal" of an atmosphere, and they dont smell like cheap perfume and cologne.

The entire point of that place is supposed to be "the club", it spent all its time trying to be a stupid "club" and not a casino.

 

If you are a casino and you are losing money, you are doing it wrong, sticking a feather up your butt does not make you a chicken, stop trying to be a chicken.

 

Thu, 06/19/2014 - 19:33 | 4875804 Seasmoke
Seasmoke's picture

FAKE PLASTIC TREES. 

Thu, 06/19/2014 - 19:47 | 4875879 Dr. Venkman
Dr. Venkman's picture

That about sums it up. I went there opening weekend and had no problem finding a spot at the blackjack and craps tables. That amazed me considering the fact that the actual floor space dedicated to gambling is pretty insignificant to begin with.

Definitely a "club" crowd, which is mostly a nuisance to gamblers. 100% failed business model. The only stupider thing they could have done was ban Orientals from the premises.

Thu, 06/19/2014 - 19:19 | 4875730 Colonel Klink
Colonel Klink's picture

Why gamble in Atlantic City when the biggest casino is just up the coast in New York?

EDIT: Damn world debt slave beat me to it.

Thu, 06/19/2014 - 19:23 | 4875751 Frozen
Frozen's picture

Sounds like a great use of a billion or two.

Thu, 06/19/2014 - 19:31 | 4875793 Seasmoke
Seasmoke's picture

Christie played that perfect. There is nothing left to take. Burn it down. 

Thu, 06/19/2014 - 19:37 | 4875835 Zgangsta
Zgangsta's picture

How bad does management suck to screw up a cash cow like a casino?

Thu, 06/19/2014 - 19:39 | 4875846 Seasmoke
Seasmoke's picture

THE JERSEY COMEBACK.  - Chris Christie 

Thu, 06/19/2014 - 19:57 | 4875931 rsnoble
rsnoble's picture

Last time I went to a local casino that wasn't in LV you can see tons of people that have no business being there.   Watch one gal watch a guy for nearly 1/2hour so she could pick up the quarter under his stool.

Food quality has kept going down, unfriendly staff.  I Don't go there anymore.

Thu, 06/19/2014 - 20:00 | 4875950 goldhedge
goldhedge's picture

If you cannot make money from a casino get a new job flipping burgers.  

Douche bags

Thu, 06/19/2014 - 20:03 | 4875956 Kprime
Kprime's picture

Green shoots, at last.

Thu, 06/19/2014 - 20:08 | 4875982 HUGE_Gamma
HUGE_Gamma's picture

this has nothing to do with the economy.. No one wants to "visit" New Jersey.. why go to AC when there are Indian Casinos everywhere.. IN the winter.. flights to vegas are super cheap while the weather in NJ is sub zero

Thu, 06/19/2014 - 20:29 | 4876053 whoopsing
whoopsing's picture

Somebody is gonna make a killing on this dealio

Thu, 06/19/2014 - 20:31 | 4876062 ThroxxOfVron
ThroxxOfVron's picture

"$932 million investment by Morgan Stanley"

 

Now You know one of the reason why Morgan Stanley needed a taxpayer bailout: they made a huge bet on taxpayers making millions of bad bets at their leveraged bet and lost when the taxpayers didn't make those millions of bad bets at their leveraged bet !

Morgan Stanely was and is THE SUCKER at the table !

Thu, 06/19/2014 - 20:48 | 4876128 Squid Viscous
Squid Viscous's picture

not really, most of those fucks are still fully employed, but who gave them 932 million to play with ?

Thu, 06/19/2014 - 20:44 | 4876116 Squid Viscous
Squid Viscous's picture

New Jersey and You, Perfect Togethah!  

- Tom Kean - 9/11 commission

Thu, 06/19/2014 - 20:45 | 4876117 Fix It Again Timmy
Fix It Again Timmy's picture

HOw in the hell can you go bankrupt when THE VIX IS IN SINGLE DIGITS!!!.....

Thu, 06/19/2014 - 22:24 | 4876546 william114085
william114085's picture

I was in las vegas this month....the casinos were far less crowded than in the past.....bound to downsize by 50% over the next decade.  

Thu, 06/19/2014 - 22:28 | 4876558 Trample the Wea...
Trample the Weak. Hurdle the Dead.'s picture

Fredo could turn that place around...but their has GOT to be something in it for him....on his own.

 

Fri, 06/20/2014 - 00:42 | 4876967 TruthTalker
TruthTalker's picture

what a miss - women do not want to attend clubs like there with their partners - where women don't go men don't go

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