Among the thorny issues surrounding the shutdown of Revel at the end of Labor Day weekend is the fate of its $129 million utility plant, The Philadelphia Inquirer reported today. It's not unusual in bankruptcy for the prosaic matter of utility bills to capture a lot of attention because electricity and other utilities are essential to keeping a bankrupt business going. In Revel’s case, there's a twist. To build the utility plant, which chills water for Revel’s air-conditioning, provides hot water and distributes electricity to the 47-story tower, the plant's owner, ACR Energy LLC, borrowed $118.6 million in the tax-exempt municipal-bond market in 2011. The $118.6 million in bond debt came unscathed through Revel's first bankruptcy last year, which wiped out $1.23 billion in Wall Street debt. When Atlantic City, N.J.-based Revel filed for its second bankruptcy in June, the casino had $447 million in secured debt. Conflict over what happens to the municipal-bond debt is likely to be a stumbling block in negotiations with prospective buyers. The bond debt is additional Revel debt under a 20-year contract because the casino is ACR's only customer. The utility plant is also an example — along with 13 restaurants and several entertainment firms that will likely lose significant investments when Revel closes — of potential collateral damage from the casino's colossal failure.
