News was reported on April 27th that Rational Group, owner of PokerStars.com, had received a termination letter informing the company of the missed deadline in the deal to purchase the Atlantic Club Casino. The Rational Group filed a lawsuit in response against Resorts International Holdings, Eric Matejevich, Michael Frawley, RIH Propco and Irwin Apartment Trust. The lawsuit requests a temporary restraining order and alleges that the defendants acted in bad faith.
In January Rational Group agreed to purchase the Atlantic City casino but the deal was pending approval of a casino license; originally a decision on the license was expected by April 24th, 2013, but updated news found that approval for regulatory review could take until August. The deadline set in the contract was Friday, April 26th, 2013, and on April 23rd Rational Group requested a formal extension with the Atlantic Club. Apparently the Atlantic Club was aware that at least 90 more days would be needed by the Division of Gaming Enforcement in considering the application for a temporary license but the request for an extension was denied on April 25th by the Atlantic Club.
“In December 2012, The Rational Group (d/b/a PokerStars) entered into a purchase agreement for the acquisition of the Atlantic Club,” Rational Group Head of Corporate Communications Eric Hollreiser told PokerNews.com when news of the fallout broke. “Several days ago the Rational Group received a purported notice of termination of this agreement from the current owners of the Atlantic Club. It was the Rational Group's expectation and understanding, based on the ongoing dealings between the parties, that the closing date would be extended to allow the transaction to be completed. The Rational Group remains entirely committed to resolving this situation and to our investment in New Jersey.”
Diamond Flush Poker reported the following from the restraining order:
- 1. Restrict the Atlantic Club from selling, offering to sell, etc, the Atlantic Club to anyone other than Rational
- 2. Restrict the Atlantic Club from continuing to breach the purchase agreement between the parties until a new closing date is set based upon the buyer obtaining their Interim casino Authorization
- 3. Declare the termination notice issued by the Atlantic Club on April 27 to be void
- 4. Reinstate the Purchase Agreement according to present terms until expiration of the review period the Division of Gaming Enforcement and the Casino Control Commission in New Jersey for the ICA
- 5. Impose a lien on the assets of the Atlantic Club in the amount of monies already paid
- 6. Impose a resulting trust on all assets of the Atlantic Club in the same amount
- 7. Prohibit the Atlantic Club from terminating the Agreement in any manner
- 8. Other further relief that the court determines to be fair
Also revealed in the lawsuit is the fact that PokerStars has paid the Atlantic Club $11 million plus $225,000 for a poker room since the agreement was struck — obviously if the contract is terminated, the Atlantic Club would retain the benefits. The contract suggests that another stipulation would require PokerStars to pay the Atlantic Club $4 million more within two days of termination.
Rational Group Head of Corporate Communications Eric Hollreiser released the following statement on the PokerStars Blog:
The Rational Group (d/b/a PokerStars) today filed a lawsuit in New Jersey Superior Court seeking to restrain the sellers of the Atlantic Club Casino and Hotel from continuing to breach the purchase agreement which was entered between the Rational Group and the seller (who are led by Colony Capital LLC) in December 2012. This step has been taken to protect Rational Group's rights and interests under the purchase agreement and reflects the Group's desire to complete the acquisition of the Atlantic Club.
Judge Raymond Batten granted our request for a temporary restraining order (TRO) shortly after the complaint was submitted, confirming the continuation of the existing agreement.
The Rational Group has funded Atlantic Club shortfalls throughout the winter season since October 2012 preventing its bankruptcy and the loss of over 1,800 jobs.
The Rational Group remains entirely committed to resolving this situation, and to its investment in New Jersey, while it continues to diligently work on completing the required licensing process.
A meeting with the parties is scheduled for May 17th in Judge Raymond Batten's court.
*Image courtesy of abcnews.go.com.