The Atlantic Club Casino Hotel filed for Chapter 11 bankruptcy protection Wednesday, a move that is part of a plan to put its Atlantic City gambling business up for auction, according to sources familiar with the matter.
California buyout firm Colony Capital LLC is the latest in a long string of owners of the casino, which is suffering along with the rest of the Atlantic City Boardwalk casinos from increased gambling competition in neighboring states.
Atlantic Club pursued a marketing scheme designed to a steady stream of local gamblers with modest prices. The strategy paid off in the form of increased revenues, but the casino was still on track to lose money.
Early papers filed in the U.S. Bankruptcy Court in Camden, N.J., estimate the Atlantic Club’s debts at $10 million to $50 million, with an unknown amount of pension liabilities topping the list.
The bankruptcy filing followed months of legal fights over an attempt to sell Atlantic Club to the Rational Group, which owns the PokerStars online gambling enterprise. A deal struck in December 2012 fell through when Rational Group could not get clearance from New Jersey regulators in time for a key deadline.
Atlantic Club has hired three law firms, an investment bank and compensation consultant Mercer (U.S.) Inc. for the bankruptcy case. Cole Schotz Meisel Forman & Leonard P.A., Willkie Farr & Gallagher LLP and Duane Morris LLP will be handling the Atlantic Club’s legal affairs, while Imperial Capital LLC of Los Angeles will serve as financial adviser and investment banker.
One of Atlantic City’s smallest casinos, Atlantic Club’s assets include land valued at more than $10 million, and buildings valued at more than $5 million, according to reports filed with state regulators.
