001065

Americas 90355580 (2K)

DEBTORS’ EMERGENCY MOTION TO (I) INCREASE INTERIM AVAILABILITYUNDER DIP FACILITY, (II) APPROVE A CORRESPONDING INCREASE IN NEW

MONEY COMMITMENTS AND (III) GRANT RELATED RELIEF

1 The Debtors in these chapter 11 cases, along with the last four digits of each debtor’s federal taxidentification number, are: Revel AC, Inc. (3856), Revel AC, LLC (4456), Revel Atlantic City, LLC (9513), RevelEntertainment Group, LLC (2321), NB Acquisition, LLC (9387) and SI LLC (3856). The location of the Debtors’corporate headquarters is 500 Boardwalk, Atlantic City, New Jersey 08401.

UNITED STATES BANKRUPTCY COURTDISTRICT OF NEW JERSEYCaption in compliance with D.N.J. LBR 9004-2(c)

FOX ROTHSCHILD LLP(Formed in the Commonwealth of Pennsylvania)Michael J. Viscount, Jr., Esq.John H. Strock, Esq.1301 Atlantic Avenue, Suite 400Atlantic City, NJ 08401(609) 348-4515/fax (609) [email protected]@foxrothschild.com

WHITE & CASE LLPJohn K. Cunningham, Esq. (admitted pro hac vice)Richard S. Kebrdle, Esq. (admitted pro hac vice)Kevin M. McGill, Esq. (admitted pro hac vice)Southeast Financial Center200 South Biscayne Blvd., Suite 4900Miami, FL 33131(305) 371-2700/fax (305) [email protected]@[email protected]

Co-Counsel to the Debtors andDebtors in Possession

In re:

REVEL AC, INC., et al.,

Debtors.1

Chapter 11

Case No. 14-22654 (GMB)

Jointly Administered

Proposed Objection Deadline: TBDProposed Hearing Date: TBD

Case 14-22654-GMB Doc 1065 Filed 12/24/14 Entered 12/24/14 10:38:41 Desc Main Document of 10

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Revel AC, Inc. and its affiliated debtors and debtors in possession (collectively,

the “Debtors”) in the above-captioned chapter 11 cases (the “Chapter 11 Cases”) hereby file this

emergency motion (the “Motion”) pursuant to sections 361, 362 and 364 of title 11 of the United

States Code, 11 U.SC. §§ 101, et seq. (the “Bankruptcy Code”), for entry of an order (the “Sixth

Amended Interim DIP Order”), substantially in the form the Debtors shall file in advance of the

hearing on the Motion, (i) increasing the interim availability under the Debtors’ DIP Facility (as

defined below),2 (ii) approving a corresponding increase in the “new money” commitments

under the DIP Facility and (iii) granting related relief. In support of the Motion, the Debtors

respectfully represent as follows:

BACKGROUND

A. Chapter 11 Cases

1. The Debtors own a state of the art gaming and resort facility unlike any

other in Atlantic City, New Jersey. The Debtors’ facility consists of 6.2 million square feet,

located on approximately 20 acres with 820 feet of boardwalk frontage, and features the tallest

building in Atlantic City, the Revel hotel, a sleek 47-story, 710-foot high tower. The Debtors’

130,000 square foot casino featured 110 table games and approximately 2,300 slot machines.

2. On June 19, 2014 (the “Petition Date”), each of the Debtors filed a

voluntary petition for relief under chapter 11 of the Bankruptcy Code, thereby commencing these

Chapter 11 Cases. The Debtors continue to manage their property as debtors in possession

pursuant to sections 1107(a) and 1108 of the Bankruptcy Code.

2 Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms inthe DIP Credit Agreement (as defined below).


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3. On July 2, 2014, the United States Trustee appointed the Official

Committee of Unsecured Creditors (the “Creditors’ Committee”). No trustee or examiner has

been requested or appointed in these Chapter 11 Cases as of the date hereof.

4. Additional background facts on the Debtors, including an overview of the

Debtors’ business, information on the Debtors’ debt structure and information on the events

leading up to the Chapter 11 Cases are contained in the Declaration of Shaun Martin in Support

of First Day Motions and Applications [Docket No. 5].

B. DIP Facility

5. On June 19, 2014, the Debtors filed the Debtors’ Emergency Motion

Pursuant to Sections 361, 362, 363 and 364 of the Bankruptcy Code and Rule 4001 of the

Federal Rules of Bankruptcy Procedure for the Entry of Interim and Final Orders (A)

Authorizing the Debtors to (I) Obtain Postpetition Financing, (II) Grant Senior Priming Liens

and Superpriority Claims to Postpetition Lenders, (III) Use Cash Collateral, and (IV) Provide

Adequate Protection to Prepetition Secured Parties, and (B) Prescribing Form and Manner of

Notice of an Scheduling Hearings [Docket No. 16] (the “DIP Motion”). Contemporaneously

therewith, the Debtors filed the Declaration of Barak Klein in Support of DIP Motion [Docket

No. 29].

6. Pursuant to the DIP Motion, the Debtors requested approval of a senior

secured priming superpriority revolving credit facility (the “DIP Facility”), with Wells Fargo

Bank, N.A. (“Wells Fargo”), as administrative agent and collateral agent (in such capacities,

respectively, the “DIP Administrative Agent” and “DIP Collateral Agent,” and collectively, the

“DIP Agent”), Wells Fargo Bank, N.A. as letter of credit issuer (in such capacity, the “DIP

Issuing Bank”) and Wells Fargo Principal Lending, LLC and such other lenders from time to


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time party thereto (the “DIP Lenders”), which provided for a maximum interim availability of

$23.5 million pursuant to a Debtor-in-Possession Credit Agreement attached as Exhibit “A” to

the Interim DIP Order entered July 30, 2014 [Docket No. 352] (as amended, supplemented or

otherwise modified through the date hereof, the “DIP Credit Agreement”).

7. On June 20, 2014, the Court entered an Interim Order Pursuant to Sections

361, 362, 363, 364 and 507 of the Bankruptcy Code and Rule 4001 of the Federal Rules of

Bankruptcy Procedure (A) Authorizing the Debtors to (I) Obtain Postpetition Financing, (II)

Grant Senior Priming Liens and Superpriority Claims to Postpetition Lenders, (III) Use Cash

Collateral, and (IV) Provide Adequate Protection to Prepetition Secured Parties, and (B)

Prescribing Form and Manner of Notice of and Scheduling Final Hearing [Docket No. 49] (the

“Interim DIP Order”). The DIP Facility was approved on an interim basis pursuant to the

Interim DIP Order.

8. On July 30, August 21, September 4, September 22 and October 27, 2014,

the Court entered the first, second, third, fourth and fifth amended Interim DIP Orders,

respectively (collectively, and together with the Interim DIP Order, the “Interim DIP Orders”),

each of which, among other things, made minor modifications to the DIP Facility, including to

increase the interim availability thereunder to $28.73 million, and continued the interim approval

of such facility.

C. Tax Settlement and Need for Increased Availability

9. Contemporaneously herewith, the Debtors have filed a motion (the

“Settlement Motion”) to approve that certain settlement agreement (the “Settlement Agreement”)

by and between the Debtors and the City of Atlantic City (“Atlantic City”) pursuant to

Bankruptcy Rule 9019. Pursuant to the Settlement Agreement, among other things, the Debtors


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have agreed to make, promptly following entry of an order approving the Settlement Agreement,

a payment to Atlantic City in the amount of $26 million (the “Settlement Payment”). Atlantic

City in turn, among other things, has agreed to compromise and settle its claims against the

Debtors on account of real property taxes for the 2014 tax year (the “2014 Tax Claims”), and that

the Settlement Payment will constitute a full satisfaction of such claims.

10. The Settlement Agreement reflects an over $5 million reduction of the

2014 Tax Claims, as well as the avoidance of an 18% interest rate and mandatory 6% redemption

penalty, substantially benefiting the Debtors’ estates. However, the Settlement Agreement is

contingent upon the Settlement Payment, and the Debtors do not have sufficient cash on hand or

availability under the DIP Facility to make such payment. They will only be able to do so if the

maximum availability under the DIP Facility, including the interim availability, as approved by

the Interim DIP Orders, is increased to make available to the Debtors sufficient funds for the

Settlement Payment. Therefore, and subject to the entry of an order approving the Settlement

Agreement, the Debtors now request an increase in the borrowing availability under the DIP

Facility, including the interim availability, to enable the Debtors to consummate the Settlement

Agreement.

11. Furthermore, as a result of recent developments in these cases relating to

the sale process, the hearing on final approval of the DIP Facility has been continued to January

8, 2015. In addition to the funding needed to consummate the Settlement Agreement, the

Debtors require additional liquidity to fund operations to the January 8th final hearing date.

Accordingly, the requested increase in interim borrowing availability of $21.0 million is

comprised of (i) $19.0 million, which when combined with $7.0 million of cash on hand will

fund the $26.0 million Settlement Payment, plus (ii) an additional $2.0 million that will be


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available to pay anticipated operating and other expenses between now and January 8th (subject

to the Approved Budget).

12. The amount borrowed under the DIP Facility to make the Settlement

Payment (such amount, the “Tax Borrowing”) will constitute a “new money” borrowing under

the DIP Facility in the amount of $19.0 million. However, pursuant to the DIP Credit

Agreement, (x) $13.0 million of the Tax Borrowing drawn from the increased availability plus

interest will “prime ”, with the exception of a portion of the JPM Roll-Up Borrowings in an

amount to be set forth in the Sixth Amended Interim DIP Order (plus interest, together with any

fees and costs then due with respect thereof), all other obligations (including, without limitation,

all other “new money” obligations and the remaining JPM Roll-Up Borrowings) under the DIP

Facility, and (y) the remaining $6.0 million of the Tax Borrowing (plus interest) will rank

equally with all other “new money” obligations under the DIP Facility. Unlike other “new

money” borrowings under the DIP Facility, however, the initial $13.0 million “priming” portion

of the Tax Borrowing drawn from the increased availability under the DIP Facility requested by

this Motion will not trigger any roll-up of the outstanding obligations under the prepetition

Tranche A-1 or A-2 Revolving Credit Facilities.

13. Finally, Atlantic City has informed the Debtors that, for budgetary

reasons, it is critical that they receive the Settlement Payment before year end. Accordingly,

because the timing of the Debtors’ requested relief is critical, the Debtors have filed concurrently

herewith a motion to shorten the required notice period and hear this Motion and the Settlement

Motion on an expedited basis.


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Jurisdiction

14. This Court has jurisdiction to consider this matter pursuant to 28 U.S.C.

§§ 157 and 1334. This is a core proceeding pursuant to 28 U.S.C. § 157(b). Venue is proper

before this Court pursuant to 28 U.S.C. §§ 1408 and 1409.

Relief Requested

15. By this Motion, pursuant to sections 361, 362 and 364 of the Bankruptcy

Code, the Debtors respectfully request entry of the Sixth Amended Interim DIP Order,

substantially in the form the Debtors shall file in advance of the hearing on the Motion,

(i) increasing the availability under the Debtors’ DIP Facility, including on an interim basis,

(ii) approving a corresponding increase in the amount of “new money” commitments under the

DIP Facility and (iii) authorizing corresponding modifications to the DIP Credit Agreement, in

each case as set forth in Exhibit “A” hereto.

Basis for Relief

16. Section 364 of the Bankruptcy Code gives bankruptcy courts the power to

authorize postpetition financing for a chapter 11 debtor in possession. See In re Defender Drug

Stores, Inc., 126 B.R. 76, 81 (Bankr. D. Ariz. 1991), aff’d, 145 B.R. 312 (B.A.P. 9th Cir. 1992).

Section 364 of the Bankruptcy Code provides in pertinent part that:

(c) If the [debtor in possession] is unable to obtainunsecured credit allowable under section 503(b)(1) of this title asan administrative expense, the court, after notice and a hearing,may authorize the obtaining of credit or the incurring of debt –

(1) with priority over any or all administrativeexpenses of the kind specified in section 503(b) or 507(b)of this title;

(2) secured by a lien on property of the estatethat is not otherwise subject to a lien; or


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(3) secured by a junior lien on property of theestate that is subject to a lien.

(d)(1) The court, after notice and a hearing, may authorizethe obtaining of credit or the incurring of debt secured by a senioror equal lien on property of the estate that is subject to a lien onlyif –

(A) the [debtor in possession] is unable to obtainsuch credit otherwise; and

(B) there is adequate protection of the interest ofthe holder of the lien on the property of the estate on whichsuch senior or equal lien is proposed to be granted.

11 U.S.C. §§ 364(c)-(d)(1).

17. Generally, courts apply a three-part test to determine whether a debtor in

possession may obtain credit under section 364 of the Bankruptcy Code. Under such test, a

debtor may incur postpetition financing if it demonstrates that (a) it cannot obtain credit

unencumbered or without superpriority status, (b) the postpetition financing is necessary to

preserve the assets of the estates, and (c) the terms of the postpetition financing is fair,

reasonable and adequate given the circumstances of the debtor and the proposed lenders. See In

re Crouse Grp., Inc., 71 B.R. 544, 549-50 (Bankr. E.D. Pa. 1987); see also In re Aqua Assocs.,

123 B.R. 192, 195-96 (Bankr. E.D. Pa. 1991).

18. This Court has already determined that the DIP Facility satisfies the

requirements of Section 364 of the Bankruptcy Code on an interim basis, as reflected by the prior

approval of the DIP Facility by the Interim DIP Orders. The sole relief requested by this Motion

is an increase of the borrowing availability and commitments under the existing DIP Facility,

together with certain corresponding modifications to the DIP Credit Agreement, among other

things, to address the priority of the proposed borrowings under such additional availability and

to extend out certain relevant milestone dates under the DIP Credit Agreement.


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19. As set forth in greater detail in the Settlement Motion, the Settlement

Agreement will reduce the Debtors’ property tax liability by more than $5 million and eliminate

potentially material litigation cost. The DIP Facility represents the sole source of financing

available to the Debtors in these Chapter 11 Cases and, here, the Debtors seek an increase in the

maximum availability under the DIP Facility in order to be able to effect a settlement that

preserves the assets of the estates, as well as to allow them to continue operating pending the

final hearing to approve the DIP Facility scheduled for January 8, 2015, and it is therefore in the

best interest of all of the Debtors’ creditors and stakeholders. Accordingly, subject to the entry

of an order approving the Settlement Agreement, the Debtors’ respectfully submit that the Sixth

Amended Interim DIP Order should be approved.

Notice

20. Notice of this Motion has been provided to the (i) Office of the United

States Trustee for the District of New Jersey, (ii) counsel to the Prepetition First Lien Lenders,

(iii) counsel to the Prepetition Second Lien Lenders, (iv) counsel to the DIP Agent, (v) counsel to

the Creditors’ Committee, (vi) all parties requesting notices pursuant to Bankruptcy Rule 2002,

(vii) the Office of the Attorney General for the State of New Jersey, (viii) the DGE, (ix) the New

Jersey Casino Control Commission, (x) the Office of the Governor for the State of New Jersey,

(xi) the United States Attorneys’ Office for the District of New Jersey, (xii) the United States

Attorney General, (xiii) the Internal Revenue Service, (xiv) the Securities and Exchange

Commission and (xvi) counsel to Polo North. The Debtors submit that no other or further notice

need be provided.

21. No previous motion for the relief sought herein has been made to this or

any other court.


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WHEREFORE, the Debtors respectfully request entry of the Sixth Amended

Interim DIP Order granting (i) the relief requested herein and (ii) such other and further relief as

the Court deems just and proper.

Dated: December 24, 2014Atlantic City, New Jersey

FOX ROTHSCHILD LLP

By: /s/ Michael J. Viscount, Jr.

Michael J. Viscount, Jr., Esq.John H. Strock, Esq.1301 Atlantic Avenue, Suite 400Atlantic City, NJ 08401(609) 348-4515/fax (609) [email protected]@foxrothschild.com

– and –

John K. Cunningham, Esq.(admitted pro hac vice)Richard S. Kebrdle, Esq.(admitted pro hac vice)Kevin M. McGill, Esq.(admitted pro hac vice)WHITE & CASE LLPSoutheast Financial Center200 South Biscayne Boulevard, Suite 4900Miami, Florida 33131(305) 371-2700/fax (305) [email protected]@[email protected]

Co-Counsel to the Debtors and Debtors inPossession


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