Colony Capital and Atlantic Club Seek Lifting of Temporary Restraining OrderPublished on May 14th, 2013 3:57 pm EST
Last week, the Rational Group (parent company of Pokerstars) filed a lawsuit in New Jersey Supreme Court in an attempt to try and salvage their deal to purchase the Atlantic Club.
The Rational Group was granted a temporary restraining order that prevented the owners of the Atlantic Club (including Colony Capital LLC) from negotiating with other parties for the sale of the casino.
A number of months ago, the Rational Group agreed to purchase the Atlantic Club, contingent upon the Rational Group being granted an interim New Jersey casino license by April 26th, 2013. The purchase price for the casino was reportedly $15 million plus the assumption of certain liabilities.
New Jersey gaming regulators decided that they wouldn't be able to make a decision on the Rational Group's license application by April 26th - instead, a decision will likely come this summer.
The owners of the Atlantic Club say that the purchase contract is straightforward - if the Rational Group wasn't granted a license by April 26th, 2013, the deal to purchase the casino was null and void. On top of that, the Rational Group would also be on the hook for a $4 million termination fee, plus they would lose a reported $11 million that they have already advanced the Atlantic Club to continue operations.
Colony Capital LLC and the Atlantic Club feel that the purchase agreement with the Rational Group is now null and void and that they should be free to negotiate with other parties, while the Rational Group feels that this (negotiations with other parties) would be a breach of their purchase agreement.
Colony Capital and the Atlantic Club responded to the Rational Group's lawsuit earlier this week, saying that the Rational Group agreed to the termination provision in their agreement and that they (Colony Capital and the Atlantic Club) are fully within their rights to start negotiations with other parties.
Colony Capital and the Atlantic Club say that they would be put in a very bad position if Pokerstars' deal was allowed to "linger" throughout most of the summer, only to be rejected. According to Colony Capital and the Atlantic Club, they would "almost certainly miss the opportunity to pursue other options during the critical summer season and prior to the November 2013 launch of online gaming in New Jersey."
Interestingly enough, Colony Capital and the Atlantic Club also state that they were "not fully aware of the extent of the criminal problems that Scheinberg and other senior officials at Pokerstars were facing" prior to the signing of the term sheet for the preliminary sale of the casino. Let's not forget that the American Gaming Association publicly opposed the Rational Group's bid for an interim casino license earlier in the year.
The "deal" for the Atlantic Club continues to get messier by the day.
The worst case scenario for Pokerstars? They are out millions and millions of dollars and miss out on obtaining their foothold into the New Jersey market.
Source: NorthJersey.com - Breaking: Excerpts From the Atlantic Club's Retort to Pokerstars' Lawsuit
Filed Under: Poker Legal Issues