Bankruptcy Judge Approves Revel Casino Tax Deal
On Tuesday, the Federal Judge in charge of the Revel Casino bankruptcy hearings, Gloria Burns, approved a $26 million settlement between the Revel Casino and Atlantic City that will provide both a tax cut for the closed casino as a much needed cash injection for the beleaguered New Jersey City.
During the bankruptcy hearings held in Camden, New Jersey, Judge Gloria Burns also indicated that she would be approving a request, on behalf of the Revel Casino, to increase the size of the casinos $61 million bankruptcy loan from Wells Fargo, to pay for the tax settlement.
“It gets cash in the door by year-end,” says Revel’s attorney John Cunningham, during a hearing that was conducted via a conference call.
Settlement to Cut Revel's Final Tax Bill by $7million
The settlement, which will cut Revels final tax bill by $7 million, was agreed upon if the casino would agree to drop its court case to have its property taxes reduced.
The now defunct casino, which shut its doors in September owes the approximately $33 million in taxes, interest and penalties to the State of New Jersey. Unfortunately, tax collectors have failed to generate any bids at the auction of the casinos tax debt which took place earlier in the year, which was one of the main reasons why negotiations began for the reduction of the casinos tax bill.
Atlantic City turned to the State of New Jersey for a short-term loan of $40 million last week after it was forced to reduce a bond sale this month, before scrapping it entirely.
Tax revenue from the many casinos on the boardwalk contributes approximately 70% of the city’s total budget, according to research and rating’s firm, Moody’s. The Atlantic City municipal budget has been weighed down by the ongoing financial woe’s being experienced by the city.
Four of the city’s casinos have already shut down this year and the fifth, the Trump Taj Mahal’s future is still uncertain following a string of court battles and strikes. An affiliate of Caesars Entertainment Corp, a company that owns three Atlantic City casino, is also expected to file for bankruptcy in the early parts of 2015. Another concern on the already burdened city whose unemployment rate is increasing every month.
During the first quarter of 2015, the city will hope to issue $140 million worth of bonds in an effort to pay property tax appeals won by the casinos. However, it appears that there is nothing that can be done to prevent the downfall of the once famous gambling mecca and only time will tell if Atlantic City will be able to bounce back.
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