Major Victory for Tenants in Atlantic City’s Revel Casino Hotel Bankruptcy

June 25, 2015 - Morrison Cohen LLP achieved a major victory in United States Bankruptcy Court, District of New Jersey for a group of tenants seeking to protect their right to remain in possession of their leaseholds following a sale of the Atlantic City's Revel Casino Hotel.

The firm is representing American Cut AC Marc Forgione, Azure AC Allegretti, and Lugo AC, LLC (collectively the “LDV Tenants”) who joined with other tenants of the bankrupt casino in a highly contested bid to remain in possession of their leasehold interests notwithstanding the sale of the property.

Prior to Revel's bankruptcy filing, the tenants had entered into lease agreements (“Agreements”) with the Revel, under which the tenants operated various retail facilities on the Revel's premises. Revel was never able to turn a profit and ultimately filed for bankruptcy in June, 2014. Revel then began a lengthy marketing process in order to sell the facility.

In January 2015, Revel moved to sell the property to Polo North Country Club LLC, which is owned by real estate developer Glenn Straub. The Polo North sale sought to divest the tenants of their right to remain in possession of their spaces, in contravention of their rights under 11 U.S.C. § 365(h) -- a Bankruptcy Code provision that protects the rights of tenants in the event their landlord files for bankruptcy. Revel initially prevailed in divesting the tenants of their leasehold interests; however, that ruling, and the sale itself, were called into question by the Third Circuit Court of Appeals. After significant additional litigation, Revel and Polo North dropped their bid to sell free and clear of whatever interests the tenants had.

After the closing of the sale, Polo North then took the position that the tenants had no rights under section 365(h) because the Agreements were not true leases, and as a result the tenants had no possessory interests to protect. At a hearing on June 24, 2015, the Court rejected Polo North's contention ruling that the Agreements were not true leases and holding that section 365(h) applied. The Court further ruled that Polo North could not interfere with the tenant's right to access their spaces and to reopen their businesses as and when the tenants saw fit.

The Morrison Cohen team lead by Robert K. Dakis with the assistance of Joseph T. Moldovan continues to play a significant role for the group of tenants involved in Revel's bankruptcy and was critical in achieving this current victory.