IMPERIAL Pacific International has informed the federal bankruptcy court that it has agreed with the Committee of Unsecured Creditors to sell the unfinished hotel-casino in Garapan.
But IPI said it is opposed to the CNMI government’s motion to convert the casino investor’s Chapter 11 bankruptcy petition to Chapter 7.
Attorney Chuck Choi, who represents IPI, informed the bankruptcy court on Friday that the debtor or IPI and the Committee of Unsecured Creditors have agreed to a “363 sale process” for the unfinished hotel-casino in Garapan.
Section 363 requests the court for an order authorizing the sale of a debtor’s assets.
For its part, the CNMI government, represented by Chief Solicitor J. Robert Glass Jr., said IPI has no ability to generate revenue or operate as a casino and has “no business to reorganize.” The CNMI government said the federal bankruptcy court should convert IPI’s Chapter 11 petition to Chapter 7.
Under the U.S. Bankruptcy Code, Chapter 11 bankruptcy allows a business corporation to restructure its debts and continue operating. Chapter 7, for its part, provides for the liquidation of a debtor’s property and distribution of proceeds to creditors.
The office of the U.S. Trustee has also asked the court to convert the case “due to [IPI’s] alleged continuing losses, no likelihood of rehabilitation, and lack of insurance.”
According to Choi, although the bankruptcy petition was filed just two and a half months ago, “the Debtor and Committee have agreed to embark on a ‘363 sale process’ as the most efficient means of monetizing the Hotel for the benefit of creditors.”
He said the debtor and committee have interviewed one potential investment banker/real estate brokerage.
“As stated in the Committee’s opposition to the Conversion Motion, the Debtor and Committee anticipate the filing of a motion to approve a ‘stalking horse’ bid (subject to overbids) with the goal of selling the Hotel by year’s end and filing a liquidating plan to pay creditors in their order of priority,” Choi said.
The Committee of Unsecured Creditors, through attorney Aram Ordubegian in a separate motion, requested that the court deny the Commonwealth’s motion, and instead appoint a Chapter 11 trustee if the debtor does not satisfy the sale milestones by the Aug. 14 hearing.
IPI operated a casino for approximately four years, until the Covid-19 pandemic forced its closure in March 2020. Hotel construction also ceased due to a lack of funds. It is estimated that the cost of completing the hotel will be between $100 million and $150 million.
IPI is not operating but has approximately 15 employees, 10 of whom provide security services.
Lender
On June 21, 2024, Chief Judge Ramona V. Manglona approved up to $1.4 million in debtor-in-possession or DIP financing for IPI from Loi Lam Sit.
IPI believes this amount will be sufficient to pay administrative expenses through year’s end, Choi said.
In a declaration filed in court, Loi Lam Sit told the court that he has no prior relationship with IPI, Best Sunshine Holdings or IPI Holdings, and is not related to IPI majority owner Cui Lijie or her son Ji Xiaobo.
He said he is a resident of Hong Kong and employed as general manager of Top Pride International Limited, a wholesale distributor of cosmetic products.
According to Loi Lam Sit, he also receives income from personal investments into companies listed on the Hong Kong Stock Exchange.
“I agreed to use my personal funds in the amount of $7 million to help IPI (CNMI) to pay the [Casino] Commission if the court approves it. I do not object to the debtor’s amended motion for DIP financing in the amount of $1 million,” Loi Lam Sit added.
IPI filed for Chapter 11 bankruptcy in the District Court for the NMI on April 19, 2024, saying it owes creditors over $165.8 million.
