Stockton University Battling Caesars In Bankruptcy Court Over Showboat Purchase
Posted on: May 26, 2015, 03:19h.
Last updated on: May 26, 2015, 03:19h.
Stockton University was hoping that the purchase of the Showboat casino in Atlantic City would give the school a new satellite campus for students to enjoy.
Now, the university is battling Caesars in court, saying that the company defrauded them by withholding important information during the sale.
The university is seeking up to $22 million in damages from Caesars Entertainment, the former owners of the Showboat Hotel and Casino.
Stockton bought the casino for $18 million last December in the hopes of turning it into a satellite campus.
When they made the purchase, the school understood that there was a deed restriction on the property that prevented it from being used as anything other than a casino.
However, university officials say that they bought the casino under the understanding that Caesars either already had taken care of, or would soon resolve, that issue, allowing the school to use the property in any way they desire.
Taj Mahal Enforced 1988 Covenant
But the school soon found out that their new neighbors didn’t see it that way. The Trump Taj Mahal made it clear that they planned to enforce the 1988 legal covenant that prohibited the Showboat from being opened as anything other than a casino resort.
The covenant was initially designed to ensure that there would be plenty of foot traffic for all casinos in the area, and that concern still exists today.
However, the Taj Mahal also expressed worries that having an influx of college students near their casino might lead to an increase in minors sneaking in to gamble illegally.
That has left Stockton looking for a way out of the deal. The school wants to enforce an indemnification clause in the sale contract that was supposed to protect it from any liabilities should the Trump Taj Mahal attempt to enforce the covenant.
“These filings will protect and preserve Stockton’s rights,” Acting Stockton President Harvey Kesselman said in a press release. “It puts the entities that have filed for Chapter 11 bankruptcy, along with the creditors and other parties of interest in the bankruptcy cases, and the US Bankruptcy Court, on notice that we intend to protect the University and exercise our contractual and equitable rights.”
Stockton is filing a number of claims against Caesars, including breach of contract, fraud, and the concealment of material facts. Caesars has yet to make any public comments about the claims.
Straub May Buy Showboat
There have been efforts to resolve the situation, with Florida developer Glenn Straub (who recently purchased the former Revel casino) saying that he would put up $26 million to buy the Showboat.
Atlantic City Mayor Don Guardian also put together a meeting between Caesars, Stockton, Straub and the Trump Taj Mahal, though a confidentiality agreement has stopped anyone from talking about just what happened during the discussions.
The ongoing mess has caused Kesselman to extend his stay at Stockton University. Named acting president on April 28, Kesselman said he would be leaving to become president at the University of Southern Maine at the start of July.
But Stockton has now asked Kesselman to stay on indefinitely in order to deal with the Showboat situation. The University of Southern Maine agreed to let him out of his contract with them, and Kesselman says he’s happy to stick by his school.
“Stockton has been a part of me since its founding, and I cannot walk away now,” Kesselman said.
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