According to reports, the Rational Group, owner of the world's leading online poker website PokerStars.com, received a termination letter from the Atlantic Club Casino on April 27 informing the company that it had missed the deadline to purchase the Atlantic City property. In response, the Rational Group has filed a lawsuit against Resorts International Holdings, Eric Matejevich, Michael Frawley, RIH Propco and Irwin Apartment Trust, requesting a temporary restraining order and alleging the defendants acted in bad faith.
The Rational Group agreed to acquire the rundown Atlantic City property in January pending approval of a casino license. The two companies originally expected a decision on the license by April 24, 2013, though it came to light that approval could take until August for regulatory review. As such, a Friday, April 26, 2013 deadline in the contract between the Rational Group and the Atlantic Club need to be extended in order for the former to obtain a temporary license from gaming regulators to maintain the agreement. On April 23, the Rational Group requested a formal extension of contracts terms with the Atlantic Club, which was apparently aware that the Division of Gaming Enforcement would need at least 90 more days to consider the application to get the temporary license. The Atlantic Club denied the request for an extension on April 25.
“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 said in a statement released to PokerNews upon initial reports of the fallout. “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.”
According to Diamond Flush Poker, the restraining order provides for the following:
- 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
The lawsuit also reveals that PokerStars has already paid the Atlantic Club $11 million plus $225,000 toward a poker room since entering the agreement, all of which the property would have retained had the contract been terminated. Another stipulation in the contract suggests that PokerStars would have had to pay the Atlantic Club $4 million more within two days of termination.
Updated 05/06/13 2:30 p.m. EST: Rational Group Head of Corporate Communications Eric Hollreiser issued 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.
Updated 05/06/13 4:30 p.m. EST: The parties will meet in Judge Raymond Batten’s court on May 17th.
PokerNews will bring you updates on this story as it develops.
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