Atlantic City's oldest casino fights foreclosure
ATLANTIC CITY -- Admitting it hasn't made loan payments since October, Resorts Atlantic City is trying to fight off foreclosure by arguing that its lenders don't have a casino license and therefore can't own or operate the place.
Resorts also plans to set aside $15 million to cover payouts to winning gamblers, payroll and taxes while the two sides battle for control of New Jersey's first casino.
On Wednesday, the state Casino Control Commission will consider a request by Column Financial to either foreclose on the property, or have the owners surrender title to it without having to go through foreclosure.
Resorts International Hotel and its corporate affiliates say Column does not have a casino license, and therefore can't be permitted to take over the casino-hotel.
"In the interest of its efforts to maintain the current operations at Resorts, including the payment of taxes, winning wagers and compensation due employees and vendors, (Resorts) believed it would be prudent to stop paying monthly interest in connection with the loan," the casinos owners wrote in a filing with the casino commission dated Feb. 5.
All of Atlantic City's casinos are struggling from the combined effects of the economic meltdown, and stiff competition from slots parlors in Pennsylvania and New York. But Resorts, which became the first casino outside Las Vegas in May 1978, is among the weakest here.
A smaller casino with a decidedly older clientele that tends to spend — and lose — less money, Resorts has been left behind in the race to compete with newer, hipper gambling halls like the Borgata Hotel Casino & Spa, and Harrah's Resort Atlantic City.
It won about $466,000 a day from gamblers last month, compared with $1.8 million a day for the Borgata. Resorts' revenues fell more than 25% last month compared to January 2008, and plunged more than 16% for all of 2008.
Last month, Column Financial, a commercial mortgage subsidiary of Credit Suisse, served notice on Resorts that it intends to foreclose on the casino, which hasn't paid since October on a loan backed by a $360 million mortgage.
