Polo North Memo

Case 14-22654-GMB
Doc 1068-1 Filed 12/24/14 Entered 12/24/14 14:59:20

Memorandum of Law Page 1 of 46
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__________________________________________
|UNITED STATES BANKRUPTCY COURT
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|DISTRICT OF NEW JERSEY
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|Caption in compliance with D.N.J. LBR 9004-2(c)
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|Stuart J. Moskovitz, Esq.
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|Law Offices of Stuart J. Moskovitz, Esq.
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|819 Highway 33
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|Freehold, NJ 07728
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|Tel. (732) 431-1413
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|Fax (732) 431-0798
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|Larry A. Zink, Esq. (admitted pro hac vice)
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|Zink, Zink & Zink Co., L.P.A.
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|1198 Hillsboro Mile Suite 244
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|Hillsboro Beach, FL 33062
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|Tel. (330) 492-2225
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|Fax (330) 492-3956
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|Anthony J. DeGirolamo, Esq. (admitted pro hac vice) |
|3930 Fulton Dr., N.W. Suite 100B
|Canton, OH 44718
|Tel. (330) 305-9700
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|Counsel to Polo North Country Club, Inc.
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|_________________________________________ |
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|In re:
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|REVEL AC, INC., et al.
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Debtors.
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|_________________________________________ |
Chapter 11
Case No. 14-22654 (GMB)
Jointly Administered
Related Docket Nos.: 1002, 1003,
1004, 1013
POLO NORTH COUNTRY CLUB, INC.S VERIFIED MEMORANDUM IN

SUPPORT OF OBJECTIONS TO DEBTORS MOTION FOR ENTRY OF
AN ORDER APPROVING THE SALE TO THE BACK-UP BIDDER,
POLO NORTH COUNTRY CLUB, INC. AND IN SUPPORT OF MOTION TO
APPLY $3 MILLION DOLLAR BREAK-UP FEE TO THE PURCHASE PRICE
Polo North Country Club, Inc. (Polo North), pursuant to this Courts
December 12, 2014 Order (Docket No. 1013), hereby submits its
Memorandum in Support of its Objections to the Debtors Motion for entry
of an Order approving the sale to Back-up Bidder, Polo North Country Club,
Inc. and Motion to apply break-up fee and states as follows:
m-rfiles\pncc.508\14-22654 (gmb) revel ac inc et al\memorandum in support of objections to debtors motion for entry of order
approving sale to pncc ajd 122414.doc
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Preliminary Statement
A Hearing is scheduled for January 5, 2015 to consider an Order
approving the sale to Polo North of Revels Assets, and objections related
thereto (Docket No. 1013). Revel Casino has twice, in the past two (2) years,
been the Petitioner in Chapter 11 proceedings. When no other purchaser
submitted a Qualified Bid for approximately one (1) year and with the casino
business in Atlantic City collapsing, Polo North Country Club, Inc. (Polo
North) stepped forward as the cash Stalking Horse Bidder, to purchase
Revel Casinos Assets out of Bankruptcy.
It is Polo Norths position that, for the reasons set forth herein, the Polo
North cash purchase price for Revels Assets, which was the subject of the
Auction, should be Eighty Seven Million Dollars ($87,000,000.00), and not
the Ninety-Five Million Four Hundred Thousand Dollars ($95,400,000.00)
which Revel is seeking. Because of significant and numerous improprieties,
in the bid process, Polo Norths original cash bid of Ninety Million Dollars
($90,000,000.00) should be the starting point and Polo North should receive
a Three Million Dollar ($3,000,000.00) credit on the purchase price
represented by the break-up fee that Polo North earned because the
bankruptcy estate is receiving a significant financial benefit by retaining
Brookfields Eleven Million Dollar ($11,000,000.00) deposit.
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If after considering the matters contained in this Verified Memorandum

and the Objection and Motion, the Court finds that the Auction process was
deficient to the extent the Auction significantly and adversely affected the
estates ability to receive the highest and best bid for the Property, then Polo
North requests that the Property go to auction again and return to Polo North
its deposit.
Solely as a result of Polo North signing the Asset Purchase Agreement
(APA), and agreeing to pay Ninety Million Dollars ($90,000,000.00) for
Revels Assets, did the Auction process commence, which resulted in
Brookfield becoming a bidder at the Auction. As this Court stated at the
October 7, 2014 Hearing to approve the Brookfield Asset Purchase
Agreement, it was because of Polo Norths Ninety Million Dollar
($90,000,000.00) bid that the Auction started (10/7/14 Trans., pg. 127).
Polo North would not have increased its bid had it known, during the
bid process, of the conflict of interest of the law firms running the Auction
and that the other Qualified Bidder would be allowed to take control of and
dictate the terms of the Auction. Serious and significant issues exist, going
directly to the integrity and fairness of the Auction process, where the lead
law firm for the Debtors and the lead law firm for one of the Consultation
Parties failed to timely disclose their potential conflict of interest with the
Purchaser waiting for seven (7) days until the second day of the Auction.
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In this objection, Polo North is asserting that the Auction was not
conducted in compliance with Bankruptcy Code Sections 11 U.S.C. 363(m)
or the Bid Procedure and that the Debtors did not conduct a fair and open bid
process, reasonably calculated to lead to the highest and best price for the
Assets of Revel Casino. The Debtors counsel failed to timely disclose who
were the Qualified Bidders other than Polo North, and the Debtors allowed
the Purchaser to subvert the Revised Bid Procedure and to dictate and take
control of the bid process, thereby thwarting the goals of the sale to bring the
highest and best price for the Revel Casino. The end result was Brookfield
US Holdings was declared the successful bidder1 and Polo North was the
back-up bidder.
Procedural History relevant to Polo Norths Objections to the Sale
On June 19, 2014 (the Petition date) REVEL AC, INC. and its affiliated
Debtors and Debtors in possession (Debtors) filed a voluntary petition for
relief under Chapter 11 of the Bankruptcy Code. (Docket No. 1). The Debtors
continue to manage their property as Debtors in Possession, pursuant to 11
U.S.C. 1107(a) and 1108.
On December 12, 2014, this Court entered its Order approving the Debtors termination of the Brookfield
Asset Purchase Agreement. (Doc. 1013). The Motion to terminate and Statement of Debtors counsel
reflect that Brookfield has forfeited its Eleven Million Dollar ($11,000,000.00) deposit.
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On June 20, 2014, the Debtors filed their Motion to sell Property free
and clear of liens and for Order authorizing and approving bid procedures.
(Docket No. 57).
On June 30, 2014, an Application for Entry of an Order Authorizing
Debtors to Employ and Retain White & Case, LLP as attorney to the Debtors,
which included the Declaration of John K. Cunningham in connection with
the employment of White & Case, LLP as attorney for the Debtors. (Docket
No. 99).
On July 14, 2014, the Corrected Order was entered:
a)
authorizing and approving bid procedures to be employed
in connection with the proposed sale;
b)
scheduling an auction and sale hearing;
c)
authorizing and approving assignment;
d)
procedures approving the manner and form of Notice of
the auction and assignment procedure;
e)
granting related relief. (R. 231) (App. 2).
On August 6, 2014, the first Notice of Adjournment of Auction was

filed. (Docket No. 442). There were no Qualified Bidders.
On August 13, 2014, the Second Notice of Adjournment of Auction was
filed. (Docket No. 489). There were no Qualified Bidders.
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On September 10, 2014, the Debtors filed their Motion for Entry of an
Order modifying the Bid Procedure Order to approve certain bid procedures,
including a break-up fee and granting related relief. (Docket No. 610).
On September 15, 2014, the Bankruptcy Court entered its Order
modifying bid procedures and granting Motion to approve certain bid
procedures, including break-up fees and granting related relief and setting
the Auction to commence on September 24, 2014. (Docket No. 625).
On September 24, 2014, Polo North and other potential bidders
gathered at White & Cases New York City office to commence the Auction.
The Auction was adjourned after six (6) hours with Polo North being disclosed
as the only Qualified Bidder.
On September 26, 2014, the Amended Third Notice of Adjournment of
Auction was filed. (Docket No. 683).
On September 29, 2014, Polo North filed its Motion to Abate Auction
and compel proper bid procedures and disclosure, including the Transcript of
the September 24, 2014, Auction. (Docket No. 686).
On September 30, 2014, at 9:01 a.m. (on the day the Auction was to
recommence), and after the parties were assembled at the offices of White &
Case, the Third Supplemental Declaration was filed by John K. Cunningham
(who was in charge of running the Auction for the Debtors) in connection with
the employment and retention of White & Case, LLP as attorney for the
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Debtors. (Docket No. 685). The Third Supplemental Declaration of John

Cunningham discloses that White & Case also represents Brookfield Asset
Management.2 There is no entry on the Docket between September 23 and
September 30, 2014, disclosing Mr. Cunningham and White & Cases
potential conflict in representing the Debtors and conducting the Auction, and
also representing another Brookfield entity named Brookfield Asset
Management.
The Third Supplemental Declaration fails to make any
meaningful disclosure as to actual dollar amount of business, and type of

work, White & Case is doing with Brookfield Asset Management and whether
White & Case had represented any other Brookfield entities in the past and
the nature and extent of that representation.
Also, on September 30, 2014, at 4:03 p.m., the Supplemental
Declaration of Michael D. Sirota, Esq. was filed in support of the application
to retain and employ Cole, Schotz, Meisel, Furman & Leonard, PA., disclosing
that Cole Schotz currently represent affiliates of Brookfield US Holdings,
LLC (Docket No. 691). Mr. Sirota is counsel to the Official Committee of
Unsecured Creditors, one of the Consultation Parties who played a key role in
Another Brookfield entity, named Brookfield Property Partners, was the Brookfield entity providing the equity
commitment to Brookfield US Holdings, LLC. (R. 831, Pg. 46). A review of the Brookfield Asset Management
website discloses Brookfield is a global alternative asset manager with approximately two hundred billion in assets
and management. At the October 7, 2014 Hearing, Mr. Cunningham described Brookfield US Holdings, parent,
Brookfield Property Partners, as a public, multibillion dollar international real estate fund. (R. 831, Pg. 14). The
testimony at the October 7, 2014 Hearing was that Brookfield was a Qualified Bidder as of September 23, 2014 at
4:00 p.m. (R. 831, Pg. 82).
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the Auction. Mr. Sirotas law firm, Cole Schotz, was at the time of his
disclosure, also representing affiliates of Brookfield US Holdings, LLC, the
named Purchaser of the Property. Mr. Sirotas disclosure stated that the
representation of these entities is less than one percent (1%) of Cole Schotz
total revenue, but failed to disclose the type of work and whether that one
percent (1%) or less is in dollar terms, millions of dollars in revenue for
Brookfield.
On October 1, 2014, the Debtors filed the Notice of Selection of
Successful Bidder and Back-up Bidder.
The document recites that the
Brookfield US Holdings, LLC cash bid of One Hundred Ten Million Dollars
($110,000,000.00), plus certain assumed liability and additional consideration
was the Successful Bidder and that the bid of Polo North Country Club, Inc.,
as the Back-up Bidder with a bid of Ninety-Five Million Four hundred
Thousand Dollars ($95,400,000.00). (Docket No. 696).
On October 5, 2014, Polo North filed its objection of Stalking Horse
Purchaser, Back-up Bidder to the sale of assets to Brookfield US Holdings,
LLC with the September 24, 2014, and September 30, 2014, Transcript
attached. (Docket No. 717).
On October 7, 2014, the Debtors filed their Reply to Objections of
Stalking Horse Bidder, Polo North Country Club, Inc. to the sale of assets to
Brookfield US Holdings, LLC. (Docket No. 727).
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On October 7, 2014, the Bankruptcy Court issued its Order approving

the sale and purchase of the assets of the Debtors, to Brookfield, free and clear
of liens, claims, encumbrances and interests, and granting related relief, which
is the Order appealed from in this Appeal. (Docket No. 732).
On October 8, 2014, Polo North filed its Objections of Stalking Horse
Purchaser, Back-up Bidder to the sale of assets to Brookfield US Holdings,
LLC. (Docket No. 739).
October 17, 2014, Polo North filed its Notice of Appeal to the US
District Court from the October 7, 2014, Order approving the sale and
purchase of the assets. (Docket No. 780).
Statement of the Facts
The Filing of the Second Revel Casino Bankruptcy
The second Revel Casino Bankruptcy was filed on June 19, 2014
(Docket No. 1). Soon after the Revel Bankruptcy was filed, the Debtors filed
their Motion to sell the Property. (Docket No. 5).
There are no entries on the Docket that between June 19, 2014 and
September 10, 2014, that a Qualified Bid3 had been received and approved by
the Court for the Property.
Qualified Bid is defined in the Revised Bid Procedures (R. 625, Pg. 7) (App. 1).
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The Polo North September 10, 2014 APA to Purchase the Property
On September 10, 2014, Polo North executed an Asset Purchase
Agreement for the Property for a purchase price of Ninety Million Dollars
($90,000,000.00) cash. (Docket No. 831). As a result of Polo North executing
the APA on September 10, 2014, the Debtors filed an Emergency Motion for
entry of an Order modifying the Bid Procedure Order to approve a break-up
fee and granting related relief. (Docket No. 610).
The September 15, 2014 Order
On September 15, 2014, the Court entered its Order modifying the Bid
Procedures Order to approve certain Bid Procedures, including Break-up Fee
and granting related relief. (Docket No. 625).
The September 15, 2014, Order, page 2, sets forth, among other things,
that:
a)
Break-up Fee is an essential inducement and condition
relating to the Stalking Horse Purchase entry into the Polo APA;
b)
The Revised Bid Deadline is September 23, 2014 at 4:00
p.m.;
c)
To be considered a Qualified Bid, in addition to the
requirements found in the Bid Procedure Order, a bid:
1.
Must include an executed APA on
substantially the term of, or on more favorable terms than
those set forth in the Polo APA; and,
2.
Must be accompanied by a marked-up
version of such APA reflecting changes from the Polo
APA.
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The Polo APA shall be declared a Qualified Bid;
e)
In the event the Debtors received more than one Qualified
Bid, an auction shall commence at 9:00 a.m. (EST) on September 24,
2014.
The Revised Bid Procedures
The Revised Bid Procedures are set forth as Schedule I to the
September 15, 2014 Order. (Docket No. 625, Pgs. 7-10).
Section 2 of the Revised Bid Procedures sets forth what are considered
as Qualified Bids. Among other things, to submit a Qualified Bid, the Bidder
shall deliver on or before September 23, 2014, at 4:00 p.m. (Bid Deadline),
to Debtors:
a)
a cash deposit of ten percent (10%) of the purchase price
(the Deposit);
b)
reasonable proof acceptable to Debtor, a consultation with
the Consultation Parties, of the Bidders ability to consummate the
purchase of the purchased assets and assumption of the assumed
liabilities;
c)
whether the Bidder was going to require a casino license;
d)
an executed Asset Purchase Agreement in substantially the
terms of, or on more favorable terms, than those set forth in the Polo
APA.
Section 3 of the Revised Bid Procedure provides, among other things,
that the bid of the Stalking Horse Purchaser (Polo North) shall be deemed a
Qualified Bid. Only those persons who have submitted a Qualified Bid, in
compliance with this Bid Procedure Order, shall be a Qualified Bidder. If a
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bid submitted on or before the Bid Deadline fails to meet the requirements of
a Qualified Bid, the Debtors are entitled to work with such Bidder in an effort
to cure any defects in the Bid and to work with such bidder to become a
Qualified Bid, in consultation with the Consultation Parties, prior to the
commencement of the Auction. Section 8 of the Revised Bid Procedures sets
forth that the Debtors reserve the right, in consultation with the Consultation
Parties, to modify the Bid Procedures in any manner that will best promote
the goals of the Sale.
The events between September 15, 2014 and September 24, 2014
On September 29, 2014, Polo North filed the Stalking Horse Purchaser,
Polo North Country Club, Inc.s Verified Emergency Motion to abate Auction,
compel proper bid procedures and disclosures and for sanctions. (Docket No.
686). The verification of the Motion is made by both Craig T. Galle, Esq. and
Glenn F. Straub. (Docket No. 686, Pg. 11). The Motion sets forth, in detail,
the events which occurred between September 15, 2014 and September 24,
2014.
The Verified Motion states that prior to the entry of the September 15,
2014, Order, at approximately 12:15 p.m., Debtors lead counsel, John K.
Cunningham telephoned Polo Norths lead counsel, Craig T. Galle, Esq., and
Mr. Cunningham advised Mr. Galle that Polo Norths principal, Glenn F.
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Straub was seeking copies of bid paperwork to be submitted by other

interested parties, by the September 23, 2014, 4:00 p.m. Bid Deadline and bids
submitted by interested parties previously.
Debtors counsel, Mr.
Cunningham, offered to produce, once received, the bid submittal documents

received from interested parties, prior to the September 24, 2014, 4:00 p.m.
Bid Deadline, but not the bids received by Debtors months earlier. Polo
Norths counsel, Mr. Galle, accepted the offer, and based upon the offer, Polo
North was induced into agreeing to go forward as the Stalking Horse Bidder
at the September 15, 2014, Hearing. (Docket No. 686, Pg. 2).
The Verified Motion states that on September 22, 2014, at 3:58 p.m., in
accordance with the Agreement between the Debtors Counsel, Mr.
Cunningham and Polo Norths counsel, Mr. Galle, Mr. Galle wrote to Mr.
Cunningham, stating that Mr. Galle and Mr. Straub would arrive at the offices
of White & Case, LLP in New York at approximately 4:00 p.m. on September
23, 2014 to review the bids and bid submittal documents that had been
received before the 4:00 p.m. Bid Deadline, set forth by counsel in the Courts
September 15, 2014 Order. (Docket No. 686, Pg. 3).
Contrary to the agreement reached between Mr. Galle and Mr.
Cunningham on September 15, 2014, before the Hearing was held and Order
issued, Mr. Cunningham responded on September 22, 2014 at 4:00 p.m. that
he would not be producing bids or bid submittal documents.
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The email exchanged between Mr. Galle and Mr. Cunningham is set
forth in Docket No. 686, Pg. 3.
The Verified Motion states that on September 23, 2014, at 1:30 p.m.,
Mr. Galle again corresponded with Mr. Cunningham and stated:
John, when we spoke, by phone, last week on the day that you called
me from the Bankruptcy Hearing, you told me (and my notes reflect)
that the Debtors would provide Mr. Straub and Polo North Country
Club, Inc. with the bids received from other bidders, during that
conversation. When I asked you whether that included the bids and
related documents from the prior bid period and negotiations, you said
no, it would only include the bid materials received from the Auction
taking place tomorrow. That was the agreement that we discussed on
the call last week, and I subsequently gave legal advice to my client
with that understanding. Why apparently has your clients position
changed? Also please articulate what the criteria is for determining
what counts as a qualified bid and what is a winning bid. If the
conditions are any different from our executed APA, obviously, the cash
portion of an as is offer is a criteria. What are the others?
We are taking off from West Palm Beach now. As I mentioned in my
email yesterday, we plan on going to your office after the 4:00 p.m.
today to review the bids that been submitted in advance of the Auction
starting tomorrow.
Craig
On September 23, 2014, at 2:15 p.m., Mr. Cunningham sent an email
to Mr. Galle. (Docket No. 727-1) (Ex. A, Pg. 2). The Cunningham email
totally ignores and fails to address or dispute the matters, which Mr. Galles
email states, were discussed and agreed to between Mr. Cunningham and Mr.
Galle on September 15, 2014.
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The Verified Motion states that the Debtors counsel failed to produce,
to Polo North, the bid submittal documents received by the 4:00 p.m. Bid
Deadline, nor were the bids submittal documents provided to Polo Norths
attorney at any time before September 30, 2014.
The September 24, 2014 Auction
The testimony of Barak Klein, at the October 7, 2014, Hearing in this
Court, to approve Brookfield US Holdings, LLC as the winning bidder,
disclosed that Brookfield US Holdings was considered by the Debtors
attorneys and the Consultation Parties to be the only other Qualified Bidder,
other than Polo North, as of the Bid Deadline of September 23, 2014, at 4:00
p.m.
Based upon Mr. Kleins disclosure, at the October 7, 2014, Hearing of
Brookfield being a Qualified Bidder, as of the Bid Deadline, and upon the two
(2) disclosures filed, seven days later, on the second day of the Auction,
September 30, 2014, both the lead counsel for the Debtors, John Cunningham
and his law firm, White & Case, and the lead counsel for the Official
Committee of Unsecured Creditors, Mr. Sirota, and the Cole Schotz law firm
had potential conflicts of interest with Brookfield and a review of the Docket
demonstrates both Mr. Cunningham and Mr. Sirota failed to make any conflict
disclosure between September 23, 2014, and September 30, 2014.
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The Courts September 15, 2014, Order provided that in the event the
Debtors received more than one Qualified Bid, an Auction shall commence at
9:00 a.m. (EST) on September 24, 2014. (Docket No. 625, Pg. 4).
Polo North and its President, Mr. Glenn F. Straub, and counsel for Polo
North, Mr. Galle and Mr. Moskovitz, along with approximately sixty-two (62)
other individuals appeared for what was, by Court Order, to be an Auction to
commence at 9:00 a.m. on September 24, 2014. (Docket No 686, Pg. 4).
The September 24, 2014, Transcript of proceedings is attached to
Docket No. 739 as Exhibit A and states that at 9:19 a.m., the record was started
when Mr. Cunningham made introductory remarks and then identified the July
14, 2014 Bid Procedure Order (Docket No. 231), and the September 15, 2014,
Order (Docket No. 625), and the Polo September 10, 2014, APA, and at page
9, Mr. Cunningham went off the record several minutes after the purported
Auction was commenced.
In the September 24, 2014, Transcript, at page 6, Mr. Cunningham
states:
So we are now commencing the Auction. We received a number
of bids last night pursuant to the Courts Bid Procedure. We are in the
process of evaluating those bids, we started the process last night.
Despite Mr. Kleins testimony at the October 7, 2014, Hearing, that
Brookfield was a Qualified Bidder as of the Bid Deadline, Mr. Cunningham
failed and refused to state what bids were submitted by the Court ordered and
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defined Bid Deadline of September 23, 2014, at 4:00 p.m. or whether any of
the number of bids were Qualified Bids pursuant to the Court Order.
In addition, both Mr. Cunningham and Mr. Sirota failed to disclose, on
the six (6) hour Transcript record on September 24, 2014, that they both had
a potential conflict of interest with Brookfield being a Qualified Bidder. A
review of the Docket discloses that both counsel failed to disclose their
potential conflict of interest for seven (7) days until each filed a statement on
September 30, 2014.
Polo North and its representatives, and the other approximately sixtytwo (62) persons attending the September 24, 2014 Auction, then waited for
approximately six (6) hours, finally, when Mr. Cunningham returned and
announced the Auction as being adjourned. (Docket No. 739) (Ex. A, Pg. 9).
Throughout the day, Polo North sought information from Debtors counsel,
but little or no information was given. (Docket No. 686, Pg. 4).
Polo Norths Counsel sent an email at 12:17 p.m. and another at 1:20
p.m. on September 24, 2014, to Mr. Cunningham. (Docket No. 739, Pg. 6).
Mr. Galles September 24, 2014, 12:17 p.m. email sets forth the
frustration which Polo North was having with the Auction:
John, what is the status of the private, closed door meeting on your end?
It is 12:15 p.m. and the Auction has not commenced yet. Whatever
discussions you are having with the Debtors advisor, or the Creditors
advisor over the last three hours, should have taken place last evening
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or early this morning, so we could have started the Auction at 9:00 a.m.,
as the Bankruptcy Court Order provided.
Craig
At approximately 3:00 p.m., after stating the Auction was being
adjourned, but before going off the record, Polo Norths counsel questioned
Mr. Cunningham as to what bids were submitted, by the Court Order, and
defined Bid Deadline and Mr. Cunningham refused to answer. (Docket No.
739) (Ex. A, Pg. 3). Mr. Cunningham failed and refused to state, on the
Transcript record, what, if any, Qualified Bids were received by the Bid
Deadline.4 Both Mr. Cunningham and Mr. Sirota failed to disclose their
potential conflict of interest with Brookfield a Qualified Bidder.
At page 13 of the September 24, 2014, Hearing Transcript, Mr. Galle
requested and Mr. Cunningham refused to produce any documents, or answer
any questions as to bid changes to bid documents submitted by the September
23, 2014, Bid Deadline and the September 24, 2014, adjournment of the
Auction.
At page 14 of the September 24, 2014 Transcript, Mr. Cunningham was
asked, but refused to provide, any superseding bid that the Debtors considered
to be the highest and best.
At the October 7, 2014 Hearing, Mr. Klein testified that Brookfield had submitted a Qualified Bid by the
Bid Deadline on September 23, 2014 at 4:00 p.m. (R. 831, Pg. 19).
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The Revised Bid Procedures, Docket No. 625, Pg. 8, which are
incorporated into the September 15, 2014, Order, provide that the Debtors
may only work with a bidder to cure defect in the bid if the bid was submitted
on or before the Court Order and defined Bid Deadline of September 23, 2014,
at 4:00 p.m.
On September 25, 2014, Mr. Galle again renewed his request to Mr.
Cunningham that the Debtors produce to Polo North, as was agreed on
September 15, 2014, bid documents received from other bidders and Mr.
Cunningham refused to provide the documents. (Docket No. 686, Pgs. 6 and
7).
The September 30 October 1, 2014 Auction
The September 30 October 1, 2014 Auction Transcript is attached to
Docket No. 739 as Exhibit B. The Auction commenced at 10:00 a.m. on
September 30, 2014, and went until 5:25 a.m on October 1, 2014,
continuously for nineteen (19) hours and twenty-five (25) minutes.
At the opening of the Auction on September 30, 2014, Debtors counsel,
Mr. Cunningham, announced what he failed to disclose and refused to answer
in response to questions by Polo Norths counsel on September 24, 2014, and
that was, that there was a Qualified Bid that was an overbid of Ninety-Four
Million Dollars ($94,000,000.00) submitted by Brookfield. (R. 739) (Ex. B,
Pg. 4).
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Both Mr. Cunningham and Mr. Sirota failed to disclose on the

September 30, 2014 Auction Transcript, during the over nineteen (19)
continuous hours the Auction was conducted, that they had a potential conflict
of interest with Brookfield US Holdings as a Qualified Bidder.
No explanation was given by Mr. Cunningham as to why the Brookfield
overbid was not announced on September 24, 2014, or at anytime prior to the
reopening of the Auction on September 30, 2014. (Docket No. 739, Pg. 8).
Debtors counsel stated Brookfield was a Qualified Bidder as of the
original Bid Deadline and that a deposit was received, along with a marked
up APA. (Docket No. 739) (Ex. B).
At 11:15 a.m. Polo North asked Debtors counsel to go back on the
record to answer Polo Norths questions regarding the Brookfield bid, and
Debtors counsel refused. (Docket No. 739, Pg. 9).
Debtors counsel, Mr. Cunningham, refused to answer Mr. Galles
question as to whether Mr. Cunningham would share proof that Brookfield
could close based on a Ninety-Four Million Dollar ($94,000,000.00) purchase
price. (Docket No. 739) (Ex. B, Pg. 13).
Mr. Cunningham refused to answer questions from Polo Norths
counsel as to which changes to the APA existed at the submission of the
Brookfield bid, at the Bid Deadline on September 23, 2014, and which
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changes were made by Brookfield after September 23, 2014. (Docket No.
739) (Ex. 2, Pg. 14).
After further consultation by the Polo North Representatives, Polo
North proceeded to state that Polo North would increase its bid by leaving a
base bid of Ninety Million Dollars ($90,000,000.00) and payment of an
additional One Million Dollars ($1,000,000.00) per year for five (5) years, for
a total of Ninety-Five Million Dollars ($95,000,000.00). (Docket No. 739)
(Ex. 2, Pg. 17).
At 5:50 p.m. on September 30, 2014, Polo North was announced as the
top bid at Ninety-Five Million Four Hundred Thousand Dollars
($95,400,000.00).
Its Ninety-One Million Dollars ($91,000,000.00) at
Closing, and Four Million Four Hundred Thousand Dollars ($4,400,000.00)

in equal installments over five (5) years. (Docket No. 739) (Ex. 2, Pg. 18).
The Polo overbid was marked as Transcript Exhibit 6.
Subsequently, Brookfield was announced as a topping bid at NinetyEight Million Dollars ($98,000,000.00), as set forth in the September 30, 2014
Transcript. (Docket No. 739) (Ex. 2, Pg. 19).
At 7:45 p.m. on September 30, 2014, Polo North advised the Debtors
counsel that Polo North needed to consult with its accountant to determine if
it could raise its bid and by how much and that since the Auction has been
going approximately ten (10) hours, that the Auction should be adjourned.
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At 8:15 p.m., Debtors counsel agreed to an adjournment, but did not

go back on the record until 10:15 p.m. on September 30, 2014. (Docket No.
739, Pg. 10).
At approximately 10:15 p.m. on September 30, 2014, after twelve (12)
continuous hours of the Auction, Mr. Cunningham went back on the record
and announced:
Polo North has made a request of the Debtors, and weve
consulted with the consultation parties about an adjournment
until Monday. And we, as we had advised all parties, we are
agreeable to adjournment until Monday at 10:00 a.m. (Docket
No. 739) (Ex. 2, Pg. 21).
After the adjournment of the Auction was announced, the counsel for
Brookfield demanded, that despite the Auction had gone for twelve (12)
straight hours and it was 10:15 p.m. on September 30, 2014, that there not be
an adjournment and that Brookfield will be submitting another proposed bid.
(Docket No. 739) (Ex. 2, Pg. 21). The attorneys for the law firms that had the
potential conflict of interest, with Brookfield, capitulated to Brookfields
demands and reconvened the Auction.
At 11:25 p.m. on September 30, 2014, thirteen (13) hours and twentyfive (25) minutes after the Auction commenced, counsel for the Debtors
announced the new Brookfield bid as One Hundred Ten Million Dollars
($110,000,000.00), but Brookfield demanded and counsel for the Debtors, in
consultation with the Consultation Parties, one of which was represented by
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Mr. Sirota, agreed, contrary to the Revised Bid Procedures, that the bid was
contingent and revocable by Brookfield, if Brookfield was not declared the
winner by 6:00 a.m. the next morning, October 1, 2014. (Docket No. 739, Pg.
11) (Ex. 2, Pgs. 23 and 24). Brookfields bid demanded, and the Debtors
counsel, along with the Consultation Parties, agreed, contrary to the Revised
Bid Procedures to another contingency and that was if the Auction goes
beyond 6:00 a.m. on October 1, 2014, the One Hundred Ten Million Dollar
($110,000,000.00) bid was revoked and the Brookfield bid would then be
Ninety-Eight Million Dollars ($98,000,000.00). (Docket No. 739) (Ex. 2, Pg.
23).
Debtors counsel acknowledged on the record that the Court Ordered
Revised Bid Procedure required that the offer had to be irrevocable and that
Brookfields demand of One Hundred Ten Million Dollar ($110,000,000.00)
revocable bid was a modification of the Bid Procedures. (Docket No. 739,
Pg. 11) (Ex. 2, Pgs. 25 and 26).
At approximately 11:25 p.m. on September 30, 2014, counsel for Polo
North stated on the record that Polo North needed additional time to study the
Brookfield overbid and again renewed its objection that the Auction was
continuing at 11:25 p.m. (which was the thirteen (13) hours and ten (10)
minutes after the auction commenced). Polo North stated it was impossible
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to make contact with its financial advisors to evaluate the new Brookfield
bid. (Docket No. 739) (Ex. 2, Pg. 27).
At 3:45 a.m. on October 1, 2014, over eighteen (18) hours after the
Auction commenced, the Debtors counsel advised Polo North that Polo
Norths rebid would now have to be submitted by 5:00 a.m. and not 6:00 a.m.
on October 1, 2014. (Docket No. 739) (Ex. 2, Pgs. 29 and 30).
At page 31 of the September 30, 2014 Auction Transcript, counsel for
Polo North, Mr. Galle, responded at 3:45 a.m.:
Were dealing with a series of false deadlines: one, first put on by the
other bidder, Brookfield; and now a second one. Were working
through the night, which under our view of things, most Courts view of
things is not reasonable. Were evaluating a bid that was given to us
shortly before midnight, and were dealing with some medical issues
that Mr. Straub is having at the moment. While you may not appreciate
it and dont know all the facts obviously, have life complications and
consequences. (Docket No. 739) (Ex. 2, Pgs. 31 and 32).
At pages 32 35 of the Transcript, at 3:45 a.m., Mr. Straub, a sixtyseven (67) year old man, not in good health, explains the seriousness of his
medical condition for which Mr. Straub stated he needed immediate attention.
Docket No. 739) (Ex. 2, Pgs. 32 35).
After hearing Polo Norths objections and the seriousness of Mr.
Straubs medical condition, the only response from Debtors counsel, Mr.
Cunningham, was well go off the record. Thank you. (Docket No. 736)
(Ex. 2, Pg. 35).
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At 5:15 a.m. on October 1, 2014 (nineteen (19) hours and fifteen (15)
minutes after the Auction commenced), counsel for the Debtors were back on
the record and announced there was no further bid from Polo North and that
Brookfields One Hundred Ten Million Dollar ($110,000,00.00) bid was
accepted and Polo North was the Back-up Bidder. (Docket No. 736) (Ex. 2,
Pgs. 35 and 36). No disclosure was made on the nineteen (19) hour transcript
of counsels law firms conflicts of interest with Brookfield.
Polo Norths counsel, Mr. Galle, then stated on the record Polo Norths
objection to the Auction proceedings and again reiterating the agreement
between Debtors counsel and Polo Norths counsel to provide other current
bids to Polo North and the unconditional nature of Polo Norths Stalking
Horse bid and that the deadline had been demanded and imposed by
Brookfield deviated from the Bid Procedures Order that the Brookfield bid
was a contingent revocable bid in violation of the Bid Procedure and that the
Debtors actions were in contravention of the Revised Bid Procedures.
(Docket No. 739) (Ex. 2, Pgs. 38 and 41).
This Motion contains the Verification of Glenn F. Straub, President of
Polo North, who attended the September 24,30 and October 1, 2014 Auction.
Polo North would not have increased its Ninety Million Dollar
($90,000,000.00) Qualified Bid if it knew: (1) of the potential conflict of
interest of the law firms running the Auction; and, (2) that the law firms
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running the Auction would allow the other Qualified Bidder, Brookfield to
take control and dictate and subvert the terms and conditions of the Auction.
The October 7, 2014 Hearing to approve the Sale to Brookfield
The October 7, 2014 Hearing Transcript was filed on October 29, 2014
and is set forth as Docket No. 831.
The Revel Casino was up for sale for a year, including the four (4)
months in the Chapter 11 proceeding filed on June 19, 2014. (Docket No.
831, Pg. 13).
Barak Klein of Moelis and Company testified that in November, 2013,
the recapitalization and restructuring firm of Moelis and Company was hired
to sell the Property and no qualified buyer came forward before the June 19,
2014 Chapter 11 filing by the Debtors. (Docket No. 831, Pgs. 37 39). In
early August, 2014, the Debtors tried to have an auction and there were no
qualified bids. (Docket No. 831, Pg. 39).
Mr. Klein testified that Polo Norths Stalking Horse bid was a Ninety
Million Dollar ($90,000,000.00) cash offer with a ten percent (10%) deposit.
(Docket No. 831, Pg. 41).
Mr. Klein testified that he did not have knowledge of an agreement
between Debtors and Polo North, for the Debtors to provide to Polo North,
bidder information. Mr. Klein did not testify there was such agreement.
(Docket No. 831, Pg. 43).
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Mr. Klein testified that as of the September 23, 2014, 4:00 p.m. Bid
Deadline, other than Polo North, Brookfield was the only other Qualified Bid
having submitted an APA and Ninety-Four Million Dollars ($94,000,000.00)
and a deposit. (Docket No. 831, Pgs. 44 46).5
Mr. Klein testified as to Debtors Exhibit 4, the Brookfield Bid, being
the top bid at Ninety-Four Million Dollars ($94,000,000.00). (Docket No.
831, Pgs. 53 and 54) (D Ex. 4).
Mr. Klein testified that Polo North made a top bid of Ninety-One
Million Dollars ($91,000,000.00) cash and One Million One Hundred
Thousand Dollars ($1,100,000.00) a year for four (4) years. (Docket No. 831,
Pg. 55 and 57) (D Ex. 6).
Mr. Klein testified that Brookfield then submitted a top bid of NinetyEight Million Dollars ($98,000,000.00) cash. (Docket No. 831, Pgs. 55 and
57) (D Ex. 8).
Mr. Klein testified as to the adjournment of the Auction on September
30, 2014 and that Brookfield came forward with a top bid of One Hundred
Ten Million Dollars ($110,000,000.00) in cash, but it had a deadline of 6:00
in the morning. (Docket No. 831, Pg. 59) (D Ex. 10).
Despite Mr. Kleins testimony, the Debtors failed to disclose, at any time on September 24, 2014, and not until the
morning of September 30, 2014 that there was a Qualified Bid other than Polo North.
5
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Mr. Klein testified that the Brookfield requirement that the bid expire
at 6:00 a.m. was a modification of the Bid Procedure.6
Mr. Klein testified on the issue of the September 30, 2014, adjournment
of the Auction that:
we agreed to adjournment, but we never actually adjourned it because
Brookfield stepped in ... (Docket No. 831, Pg. 67).
On questioning by Polo Norths attorney, Mr. Moskovitz, Mr. Klein
testified that on September 30, 2014, the only bidder that anyone else was
aware of was Polo North. (Docket No. 831, Pg. 77).
Mr. Moskovitz cross-examined Mr. Martin. For reasons unknown, Mr.
Martins role in the sale was not testified to on direct examination.
Mr. Martin testified that prior to the date of the Polo North Stalking
Horse bid, no other Qualified Bids had been received. (Docket No. 831, Pg.
92).
At page 127 of the October 7, 2014 Hearing Transcript, the Court
acknowledged the importance of Polo Norths Ninety Million Dollar
($90,000,000.00) Bid and thats the reason the Sale started on the 24th. The
Court acknowledges Polo Norths role in getting another Qualified Bidder
when the Court went on to state that we had a much higher Bid here because
we were able to have the bid process. In addressing Polo Norths counsel, this
The Revised Bid Procedures, R. 625, Pg. 7, Section 2, Item (d) (iii) mandate an irrevocable offer.
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Court states your client stepped up and has the starting bid that got to this
process. (10/7/14 Trans., pg. 126).
ARGUMENT
Polo Norths bid of $95.4 million and why
Polo Norths purchase price should be $87 Million, not $95.4 Million
In violation of section 363(m) of the Bankruptcy Code, Brookfield did
not, in good faith, put itself in the position to be the winning bidder and
materially and significantly tainted the Auction bid process because
Brookfield took control of, directed and mandated the terms and conditions of
the Auction and dictating when the Auction would end, to the direct detriment
of the estate and the creditors.
Because neither the Bankruptcy Code, nor the Bankruptcy Rules define
the term good faith, courts in applying section 363(m) have turned to
traditional equitable principles, holding that the phrase encompasses one who
purchases in good faith and for value. In re Abbotts Dairies, Inc., 788 F.2d
143, 147 (3rd Cir. 1986). Fiori v. Finkle (In re Fiori), 2013 WL 5429264 (E.D.
PA Sept. 30, 2013).
The Court stated in Abbotts Dairies, 788 F.2d at 147, the requirement
that a purchaser act in good faith speaks to the integrity of his conduct in
the sale proceedings.
Typically, the misconduct that would destroy a
purchasers good faith status, at a judicial sale involves fraud and collusion
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between the purchaser and other bidders or the trustee, or an attempt to take
grossly unfair advantage of other bidders, quoting In re Rock Indus. Mach
Corp., 572 F.2d 1195, 1198 (7th Cir. 1978); see also, In re Gucci, 126 F.3d 380,
390 (2nd Cir. 1997); In re Fiori, 2013 WL 5429264, at 12.
Courts have generally appeared willing to set aside confirmed sales that
were tinged with fraud, error or similar defects, which would in equity affect
the validity of any private transaction, supra Abbotts, at 147. The good faith
requirement prohibits fraudulent, collusionary actions, specifically, intended
and affect the sale price or contract the outcome of the sale. In re Fiori, 2013
WL 5429264, at 13.
The facts and the Courts holding in Abbotts is instructive to the present
case and Polo North objects that the Auction bid process was tainted, because
in Abbotts, the purchaser manipulated the timing to preclude competitive
bidding and that if the complaining party substantiates its claim, it would, as
a matter of law, constitute collusion between the purchaser and debtors in
possession or be an attempt to take grossly unfair advantage of other bidders,
sufficient to destroy the purchasers good faith status. Abbotts, 788 F.2d at
143. Further, the Court should look to the written objections, which are filed
to the proposed sale that are relevant to the issue of good faith. Abbotts, 788
F.2d, at 143.
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The good faith of a purchaser is shown by the integrity of his conduct

during the course of the sale proceedings, where there is a lack of such
integrity, a good faith finding may not be made and purchasers good faith is
lost by fraud, collusion between the purchaser and other bidders or the trustee
of an attorney to take grossly unfair advantage of other bidders. Licensing by
Paolo vs. Sinatra, 126 F.3d 380, 390 (2nd Cir. 1997).
The good faith analysis is focused on the purchasers conduct in the
course of the bankruptcy proceedings. This includes the purchasers actions
in preparation for and during the sale itself. The relevant inquiry is whether
the conduct was intended to control the sale price or take unfair advantage of
other bidders. Id. at 398.
Polo North would not have increased its bid above the $90 Million
Qualified Bid if Polo North had knowledge of the potential conflict of
interest of the law firms for the Debtors and counsel for the Unsecured
Creditors Committee.
A review of the Docket, the Auction Transcript and the Hearing to
approve the sale to Brookfield, establishes that the law firm for the lead
counsel for Debtors and the law firm for the Official Committee of Unsecured
Creditors, one of the Consultation Parties, directly involved in the Auction
process, knew or should have known, at the Bid Deadline on September 23,
2014, at 4:00 p.m., that their law firms had a potential conflict of interest,
because Brookfield US Holdings was, on September 23, 2014, at 4:00 p.m.,
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considered the only Qualified Bidder other than Polo North. At the September
24, 2014 Auction, Polo Norths counsel questioned Mr. Cunningham of White
& Case, and Mr. Cunningham failed to disclose that Brookfield was
considered a Qualified Bidder, as of September 23, 2014 and that his firm had
a potential conflict of interest.
A review of the Bankruptcy Court Docket indicates that both the White
& Case law firm, as lead counsel for the Debtors, and the Cole Schotz law
firm, as lead counsel for the Official Committee of Unsecured Creditors failed
to disclose, as required by Rule 2014 FRBP, their firms potential conflict of
interest with the winning Bidder/Purchaser, Brookfield and its affiliated
entities and parties, until seven (7) days after it was determined Brookfield
US Holdings was a Qualified Bidder, and not until the second day of the
Auction.
It raises a serious question as to integrity and fairness of the Auction
when White & Case filed its disclosure of a potential conflict of interest on
the morning of September 30, 2014, fifty (50) minutes before the Auction
recommenced, and Cole Schotz filed its disclosure of a potential conflict of
interest late in the day on September 30, 2014, when Polo North and
everybody else with a vested interest in the Auction, was attending the Auction
and would not have knowledge of the conflict of interest filing that same day.
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A review of the six (6) hour, September 24, 2014, Auction Transcript
and over nineteen (19) hour Transcript of the September 30 October 1, 2014,
Auction reveals neither Mr. Cunningham, nor Mr. Sirota disclosed their firms
potential conflict of interest.
Federal Rule of Bankr. Pro. 2014 deals with the employment of
professional persons and the disclosure of potential conflicts of interest. The
Rule requires specific facts showing all of the persons connections with the
debtors, creditors, any other persons of interest, their respective attorneys and
accountants. In addition, 11 U.S.C. 327 dealing with the employment of
professional persons, addresses the duty for disclosure.
In determining
whether there has been compliance with the requirements of Rule 2014, it is
the degree of completeness of the disclosure, rather than the applicants intent
or state of mind with respect to disclosure, that is material.
Rome vs.
Braunstein, 19 F.3d 54 (1st Cir. 1994).

Rule 2014 and Section 327 mandate the disclosure of potential, as well
as actual conflicts of interest. Hansen, Jones & Leta, PC vs. Segal, 220 B.R.
434 (D. Utah 1998).
The Courts holding in In re Keller Financial Services of Florida, Inc.,
248 B.R. 859 (Bank. MD Fla. 2000) is instructive of the duty to disclose and
the nature and extent and timing of the duty to disclose, which both the White
& Case and Cole Schotz law firms had in this case involving their direct and
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active participation in the Auction of the Revel Casino Property. The Court,
in Keller, reviewed the requirements of Rule 2014 and Section 327 as to the
employment of attorneys who do not hold or represent an interest adverse to
the estate, and that are disinterested persons.
The Court, in Keller, stated that Section 327 is a two-prong test: first,
the Debtors attorney must not hold or represent an interest adverse to the
bankruptcy estate; second, the Debtors attorney must be a disinterested
person. If either prong of the test is not satisfied, a professional person is
automatically disqualified. Id. at 892.
The Court in Keller Financial, went on to analyze what a disinterested
person is under 11 U.S.C. 101 (14)(E) and the Court found subsection (E)
is broad enough to exclude an attorney with some interest or relationship that
would even faintly color the independence and impartial attitude required by
the Code and Rules. The purpose of Section 327 is to prevent even the
appearance of a conflict of interest, irrespective of the integrity of the person
or firm under consideration. In re Keller Financial, 248 B.R. at 892.
It is Polo Norths position that the facts of this case demonstrate the
existence of more than the mere appearance of a conflict of interest. The law
firm that is representing the Debtors and running the Auction, White & Case,
acknowledges it currently represents one of the other Brookfield companies
in a real estate development and the Debtors counsel is consulting with one
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of the attorneys for the Consultation Parties, one of which is represented by

the law firm that acknowledges it currently represents Brookfield US
Holdings a Qualified Bidder and the ultimate Purchaser of the Revel Property
in other matters, and as such the direct role of those two law firms in Auction
of the Revel Casino rises to even more than the mere appearance of a conflict
of interest.
Polo North would not have increased its bid above the $90 Million
Qualified Bid if it knew Brookfield would be allowed to manipulate and
to take control of the Auction and usurp the bid procedures.
The above facts must be coupled with the fact the Debtors counsel, in
consultation with the Consultation Parties attorney, adjourned the Auction
after ten (10) hours and then at the insistence and demand of Brookfield,
rescinded the adjournment and continued the Auction until 5:15 a.m. the next
day.
Further, Debtors counsel, in consultation with the Consultation Parties
counsel, allowed Brookfield to dictate significant changes to the Revised Bid
Procedure to permit a revocable bid and that Brookfield was allowed to dictate
when the Auction would end.
Polo North asserts that the totality of these facts, as applied to Rule
2014, Section 327 and 11 U.S.C. 363(m) demonstrates that the Auction
process was a sham.
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The Bid Procedure was materially and significantly tainted and

Polo Norths $90 Million bid should be used and Polo North should
receive a Break-up Fee credit of $3 Million applied against the $90
Million purchase price.
The purpose of procedural bidding orders is to facilitate an open and
fair public sale process to maximize value for the estate. In re Edwards, 228
B.R. 552 (Bankr. E.D. PA 1998). Participants in a judicial sale should receive
what they have reason to expect. Gil vs. Bern, 526 F.2d 627, 628 (1st Cir.
1975).
Polo Norths reasonable expectations as to the Auction to which Polo
North had committed Ninety-Million Dollars ($90,000,000.00), as the
designated Stalking Horse Bidder, were that the Auction process would be in
accordance with the Bid Procedures Order, in accordance with any agreements
between counsel for the parties, and would be fair and transparent and that
other Qualified Bidders would not be allowed to dictate and direct how the
Auction was to be conducted and when the Auction would end, and that if any
party who was in a decision making position, or in a position to influence the
decision making process, has a potential conflict of interest, that there would
be a meaningful and timely disclosure of the potential conflict of interest.
Polo North asserts that an open and fair auction process encourages bidding
and maximizes the recovery to the estate and creditors.
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What in fact occurred in this case, is established by Polo Norths several

objections to the sale, the six (6) hour Auction Transcript of September 24,
2014, the nineteen (19) hour Auction Transcript of September 30 and the
October 1 and the October 7, 2014, Hearing Transcript.
Despite the agreement between Polo Norths counsel, Mr. Galle and the
Debtors counsel, Mr. Cunningham, that Polo North would be timely provided
with information as to who were the other Qualified Bidders the Debtors
counsel failed and refused to provide that information or to even make a
timely disclosure as to the existence of other Qualified Bidders.
A review of the September 24, 2014, six (6) hour Auction Transcript,
demonstrates Polo Norths questioning the Debtors counsel as to the other
Qualified Bids and that the Debtors counsel failed to disclose, and refused to
answer questions as to the existence of other Qualified Bids. Not until Mr.
Klein testified, at the October 7, 2014, Hearing to approve Brookfield as the
winning bidder, was it disclosed that Brookfield was designated a Qualified
Bidder as of the Court Ordered Bid Deadline of September 23, 2014, at 4:00
p.m.
What is known, is that once the Debtors counsel determined as of the
Bid Deadline that Brookfield was a Qualified Bidder, that Debtors counsel
and Official Counsel for the Unsecured Creditor Committee and one of the
Consultation Parties failed to make any disclosure of their law firms potential
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conflict of interest with Brookfield on September 23, 2014, at any time before
or during the September 24, 2014, six (6) hour Auction, at any time between
September 24, 2014, and September 30, 2014, at 9:00 a.m., when Debtors
counsel filed a disclosure. A review of the nineteen (19) hour Auction
Transcript of September 30 October 1, 2014 revealed that there was no
disclosure of the potential conflict of interest by Debtors counsel and Official
Counsel for the Unsecured Creditor Committee.
What is also known, from a review of the nineteen (19) hour Auction
Transcript is that after approximately ten (10) continuous hours of the
Auction, that Debtors counsel believed it best to adjourn the Auction and
made such an announcement.
Debtors counsel and counsel for the Consultation Parties then allowed
Brookfield to take control of the Auction process and dictate that the
announced adjournment be rescinded then allowed Brookfield to dictate that
the Auction would go another ten (10) hours, until 6:00 a.m. the next day. In
addition, Debtors counsel and the Consultation Parties allowed Brookfield to
materially modify the Revised Bid Procedures to submit a revocable offer.
The adverse affect on the estate was that the actions of Brookfield, in total,
prevented Polo North and other bidders from submitting bids and thereby,
potentially adversely affecting the recovery for the Creditors.
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Polo Norths Ninety Million Dollar ($90,000,000.00) Stalking Horse

Bid was a catalyst for the Brookfield Bid and the estate directly benefited
from Polo Norths Stalking Horse Bid by the amount of Eleven Million
Dollars ($11,000,000.00), which is the deposit forfeited by Brookfield.
But for the action of Polo North of becoming the Stalking Horse Bidder
and submitting a Qualified Bid of Ninety Million Dollars ($90,000,000.00),
the estate would not have received the windfall benefit of the Brookfield
Eleven Million Dollar ($11,000,000.00) forfeited deposit. For that reason,
Polo North requests that it be given a credit of Three Million Dollars
($3,000,000.00) against the Ninety Million Dollar ($90,000,000.00) purchase
price.
11 U.S.C. 105 and the Courts Equitable Powers
Courts of Bankruptcy are Courts of equity and exercise all equitable
powers unless prohibited by the Bankruptcy Act. Pepper vs. Litton, 308 U.S.
297, 307-308, 84 L. Ed. 281, 60 S. Ct. 238 (1939).
In the exercise of its equitable jurisdiction, the Bankruptcy Court has
the power to sift through the circumstances, surrounding any claim to see that
injustice or fairness is not done in administration of the bankruptcy estate.
Bankruptcy Courts may look through the form to substance of any particular
transaction and may constrive new remedies where those in law are
inadequate. State of Ohio vs. Collins, (In re Madeline Marie Nursing Homes),
694 F.2d 443 (6th Cir. 1982).
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The Courts equity powers are codified in 11 U.S.C. 105, which

empowers the Court to issue any order, process or judgment necessary or
appropriate to carry out the provisions of the Bankruptcy Code and is an
extremely broad grant of authority to do what is necessary to aid its
jurisdiction over a bankruptcy case. In re Allegheny Intl, Inc., 118 B.R. 282,
302 (Bankr. W.D. PA 1990).
11 U.S.C. 503(b)(1)(A) and Polo Norths Request for a
credit on the Purchase Price for the Break-up Fee
Based upon the exceptional factual circumstance of this case, with the
potential conflicts of the law firms running the Auction and the other Bidder
being allowed to take control of the Auction, and the provisions of 11 U.S.C.
503, Polo North should be granted a credit of Three Million Dollars
($3,000,000.00) on the Ninety Million Dollar ($90,000,000.00) purchase
price for the Break-up Fee Polo North would have received, if Brookfield had
not defaulted and the Debtors had not terminated the Brookfield APA.
Polo North acknowledges the provision of the Polo North APA and the
Revised Bid Procedures, dealing with the conditions for the payment of
Break-up Fee to Polo North, but asserts that the extraordinary facts of this case
warrant this Court exercising its equitable jurisdiction under 11 U.S.C 105
and the Court authorizing, under 11 U.S.C. 503 the approval of the payment
of the Three Million Dollar ($3,000,000.00) Break-up Fee.
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The Courts holding in In re OBrien Environmental Energy, Inc., 181

F.3d 527 (3rd Cir. 1999) is instructive for the analysis to be applied in
determining whether Polo Norths being the Stalking Horse Bidder provided
a benefit to the Debtors estate. Id., at 536.
Polo Norths Stalking Horse Bid was the catalyst for the Auction at the
October 7, 2014 Hearing to approve Brookfield as the winning Bidder, this
Court acknowledged the importance of Polo Norths Ninety Million Dollar
($90,000,000.00) Bid and that the reason the Sale started on the 24th and
that Polo North stepped up with the starting bid that got to this process.
(10/7/14 Trans., pgs. 126 and 127).
This Courts recognition of Polo Norths importance in the bid process
is relevant because in OBrien the Court, in rejecting the payment of a Breakup Fee, found it significant that the party seeking the Break-up Fee failed to
demonstrate that its bid was a catalyst to higher bids.
On the question of whether Polo Norths significant financial
commitment of becoming the only Qualified Bidder and committing Ninety
Million Dollars ($90,000,000.00) to start the Auction process provided a
benefit to the estate, and the estate will receive the direct financial benefit of
retaining Brookfields Eleven Million Dollar ($11,000,000.00) deposit.
The Courts holding in In re Women First Health Care, Inc., 332 B.R.
115 (Bankr. Del. 2005) is instructive on the application of Section 503
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(b)(1)(A). The Court rejected the argument that under 11 U.S.C. 503
(b)(1)(A) that the party requesting the break-up fee must be a creditor and
must demonstrate a substantial benefit to the estate, In re Women First Health
Care, Inc., 332 B.R. at 121. To establish an administrative claim under 11
U.S.C. 503 (b)(1)(A), there must be: (1) a post-petition transaction; and (2)
a benefit to the estate Id. at121 citing OBrien Environmental, 181 F.3d at 53233. In determining whether the estate will be benefited, the Court in Women
First Health Care looked to whether monies would be paid to the debtor, 332
B.R. at 121.
In this case, is should be undisputed that there was a post-petition
transaction between Polo North and the estate.
Further, it should be
undisputed that Polo North provided a significant benefit to the estate, as

recognized by this Court at the October 7, 2014 Hearing and that, but for Polo
Norths actions of becoming the Stalking Horse Bidder, the Auction would
not have proceeded. Logically, if the Auction would not have proceeded,
Brookfield would not have become a Bidder who, through no fault of Polo
North, ultimately defaulted on its APA obligation, which default directly
benefited the estate by the significant sum of the Eleven Million Dollar
($11,000,000.00) deposit, which will be forfeited.
In determining whether there is a benefit to the estate, the Court, in
Womens First set forth that the relevant inquiry is not the motivation of the
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actor, but whether the estate benefits by the actions taken, Woman First Health
Care, 332 B.R. at 122.
The Court, in Women First Health Care, stated that in the event the Court finds
that the action of the party claiming the fee benefited the estate, the costs of
those actions will be allowed despite any self- interest.
In this case, there is not some minimal speculative future benefit to be
conferred on the Revel estate. Rather, the Brookfield default has been
declared, the Contract terminated and the deposit of Eleven Million Dollars
($11,000,000.00) has been declared to be forfeited. But for Polo North
becoming the Stalking Horse Bidder, the Revel estate would not have received
the Eleven Million Dollar ($11,000,000.00) benefit.
CONCLUSION
Polo North requests this Court to enter an Order: (1) approving the Sale
to Polo North at Eighty-Seven Million Dollars ($87,000,000.00) or
alternatively; (2) to void the Auction, return to Polo North its deposit and
order that the Property be put up for auction again; (3) such other relief as
this Court deems just and appropriate.
Proposed orders are submitted
herewith.
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CERTIFICATE OF SERVICE
I, Stuart J. Moskovitz, hereby certify that on December __24___, 2014, the
foregoing Memorandum in Support of Objections to Debtors Motion for Entry of an Order
Approving the Sale to the Back-up Bidder Polo North Country Club, Inc. was electronically
filed with the Clerk of the Court using the CM/ECF system.
All Counsel designated to receive mail electronically.
/s/ Stuart J. Moskovitz

Stuart J. Moskovitz, Esq., (NJ ID#001201993)
Counsel for Polo North Country Club, Inc.
45

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Case 14-22654-GMB

Doc 1068-1 Filed 12/24/14 Entered 12/24/14 14:59:20

POLO NORTH COUNTRY CLUB, INC.S VERIFIED MEMORANDUM IN

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If after considering the matters contained in this Verified Memorandum

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scheduling an auction and sale hearing;

authorizing and approving assignment;

granting related relief. (R. 231) (App. 2).

On August 6, 2014, the first Notice of Adjournment of Auction was

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Debtors. (Docket No. 685). The Third Supplemental Declaration of John

The Third Supplemental Declaration fails to make any

meaningful disclosure as to actual dollar amount of business, and type of

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The document recites that the

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On October 7, 2014, the Bankruptcy Court issued its Order approving

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The Revised Bid Deadline is September 23, 2014 at 4:00

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The Polo APA shall be declared a Qualified Bid;

whether the Bidder was going to require a casino license;

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Straub was seeking copies of bid paperwork to be submitted by other

Debtors counsel, Mr.

Cunningham, offered to produce, once received, the bid submittal documents

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Both Mr. Cunningham and Mr. Sirota failed to disclose on the

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Its Ninety-One Million Dollars ($91,000,000.00) at

Closing, and Four Million Four Hundred Thousand Dollars ($4,400,000.00)

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At 8:15 p.m., Debtors counsel agreed to an adjournment, but did not

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Typically, the misconduct that would destroy a

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The good faith of a purchaser is shown by the integrity of his conduct

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Braunstein, 19 F.3d 54 (1st Cir. 1994).