Atlantic Club Casino OKd to Operate in Bankruptcy
The Atlantic Club Casino Hotel plans to seek bids from potential buyers by Nov. 18, and sell itself at a bankruptcy auction by mid-December.
The struggling casino-hotel received approval Friday from a federal bankruptcy judge to continue operating normally while under Chapter 11 protection.
In its bankruptcy filing made late Wednesday night, the casino said it doesn't have enough cash to continue to operate for a long time. In court Friday, its lawyer, Michael Sirota, said, "We do plan to move fairly quickly."
Judge Gloria Burns approved a schedule under which the court would entertain bids from prospective buyers Nov. 18, choose a buyer by mid-December and close the sale by the middle of February.
Michael Frawley, the casino's chief operating officer, was pleased that the initial hearing went smoothly.
"It's the beginning of a necessary process," he said. "We're fairly confident it will move quickly."
The Atlantic Club was the second Atlantic City casino to file for Chapter 11 bankruptcy this year. Revel Casino Hotel emerged from bankruptcy court in May.
Half the city's 12 casinos have file for Chapter 11 protection over the past six years.
The judge Friday allowed the casino to continue to pay employees and key vendors, pay taxes and insurance, and maintain player loyalty programs while still in bankruptcy court.
The Atlantic Club was formerly known as the Atlantic City Hilton.
In an interview Thursday, Eric Matejevich, co-chief operating officer of the casino's parent company said a number of potential buyers have expressed interest in purchasing the casino out of bankruptcy court.
The eventual price is likely to be less than the $15 million that the PokerStars website was prepared to pay for the casino before the deal fell through earlier this year, and will in all likelihood mark the lowest price ever paid for an Atlantic City casino.
For the first nine months of this year, The Atlantic Club experienced a $7.3 million operating loss, according to bankruptcy court documents. It currently has 1,660 employees, and no layoffs are planned, Frawley said.
Matejevich said a company the casino hired to solicit potential buyers contacted 120 prospective purchasers from November 2011 through September 2012. Of those, 12 signed confidentiality agreements to explore the casino's finances, but none offered to buy it.
The Atlantic Club has struggled to keep pace with newer, larger casinos, both in Atlantic City and in nearby states including Pennsylvania, New York and Delaware.
Frawley said its strategy over the past year and a half of offering low-priced gambling, food and entertainment has been working, but not fast enough. About 70 percent of the casino's floor consists of penny slot machines.
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