Atlantic City Properties At Risk As Owner Files Chapter 11

The company that owns three prominent seashore resorts in Atlantic City and Brigantine has filed for Chapter 11 bankruptcy protection, according to the Philadelphia Business Journal.

Flagship Resort Development Corp's Club Boardwalk Resorts, which owns the Flagship and Atlantic Palace resorts in Atlantic City and La Sammana in Brigantine, is facing three lawsuits, including a class action suit that could result in a judgment of over $100 million.

The lawsuits relate to claims accusing the company of using deceptive sales practices, according to the Philadelphia Business Journal.

The owner filed for Chapter 11 bankruptcy on May 10th, saying it has between $50 and $100 million in assets, but has liabilities of just as much owed to over 100 creditors.

The co-CEOs of Flagship Resort Development, Kevin Jones and Roxanne Passareala,  have resigned from the board of directors and formed a new company, AC Boardwalk Investments, LLC., according to court documents seen by the Philadelphia Business Journal.

This new entity has become a stalking horse bidder in this bankruptcy proceeding,  bidding $45.5 million for Flagship Resorts Development's assets and debts.

A stalking horse bidder is a pre-selected buyer in a bankruptcy auction who submits an initial bid to act as a floor or minimum price for the assets being sold.

A bid deadline of July 14 at 4 pm has been proposed, with an auction scheduled on July 16 at 10 am.  A sale hearing is proposed for July 18 at 10 am.

The company has said in its motion that it would be forced to cease operations and stop business if the sale is not finalized as part of the bankruptcy filing.

The Properties Involved

- Flagship, at 60 North Main Street in Atlantic City's North Inlet neighborhood, is a 32-story tower with 440 units, Kelsey and Kim's Oceanview restaurant,  an indoor pool, fitness center, and arcade.

- Atlantic Palace is a 31-story building with 292 suites and a pool on the boardwalk in Atlantic City's Orange Loop, within walking distance to the north-end boardwalk casinos.

- La Sammana, at 1400 W. Brigantine Avenue in Brigantine, is a 5-story building with  62 units and a pool.

Together, the three resorts hold 794 residential units that can be purchased as condos, rented for short-term stays, or sold as part of timeshares.