Revel AC Inc v. IDEA Boardwalk, LLC

by
When Revel entered Chapter 11 bankruptcy, its tenant, IDEA, continued to operate nightclubs and a beach club on Revel's Atlantic City casino premises. IDEA sought to protect its right to continue operating by filing an adversary proceeding. Polo became the defendant in the proceeding (and IDEA’s landlord) when the court approved a Purchase Agreement. The Sale Order authorized Polo’s purchase of Revel’s assets “free and clear of all liens, claims, encumbrances and other interests of any kind” under 11 U.S.C. 363(f). The Order contained carve-out provisions that expressly preserved certain rights relating to IDEA’s continued use of the casino premises under the Lease. After entering the Order, the Bankruptcy Court granted Revel’s long-pending motion to reject the Lease retroactively. IDEA filed a notice of its election to retain its rights as a tenant under section 365(h), as expressly allowed by the Sale Order. In an omnibus order, the Bankruptcy Court clarified major aspects of the post-petition landlord–tenant relationship between IDEA and Polo. The Third Circuit affirmed the Bankruptcy Court and the district court. IDEA is permitted to reduce its rental obligations under a tenant-protective provision, 11 U.S.C. 365(h), the Lease, and the doctrine of equitable recoupment, regardless whether its rights arose before or after Revel filed for bankruptcy and regardless whether they arose before or after Revel rejected the Lease. View "Revel AC Inc v. IDEA Boardwalk, LLC" on Justia Law