INSTEAD of auctioning its property with depressed value, Imperial Pacific International LLC, is proposing to place more than $2 million in a restricted account controlled by the federal court to secure USA Fanter Corporation Limited’s judgment amount.
USA Fanter sued IPI for its failure to pay the full amount due to the plaintiff under their construction contract for labor and materials provided for the improvement of the casino investor’s real property.
The lawsuit stated that IPI had paid USA Fanter $300,000 only and the unpaid balance due was not less than $2,089,345.28.
On May 6, 2021, Chief Judge Ramona V. Manglona entered the final judgment against IPI in the amount of $2,089,345.28.
IPI appealed to the U.S. Ninth Circuit of Court of Appeals.
USA Fanter, for its part, applied for a writ of execution and a motion for limited appointment of receiver in aid of execution, which the court granted.
On Oct. 26, the court appointed Clear Management Ltd., acting through Timothy Shepherd, as the receiver.
But IPI, through attorney Kevin T. Abikoff, requested the court to vacate the receivership decision and terminate the limited receiver.
“In the alternative, the court should stay these proceedings until the Ninth Circuit resolves IPI’s appeal,” Abikoff added.
IPI is willing and able to secure the full judgment amount of $2,089,345.28 in a restricted account designated by U.S.A. Fanter or the court within five days of an order vacating the limited receivership, Abikoff said.
He said the funds would remain in this restricted account until IPI’s appeal to the Ninth Circuit is resolved, at which point the funds would be transferred to U.S.A. Fanter for satisfaction of the judgment, or returned to IPI.
Abikoff said the amount proposed to be deposited by IPI — $2,089,345.28 — “exceeds even the most optimistic estimate of what the receiver believed could be collected — an estimate that the receiver later downgraded.”
In August 2020, Abikoff said, the receiver estimated the value of the gaming equipment at $2.25 million, but by June 2021, the receiver believed that the value was likely reduced by some unspecified amount.
Abikoff said even that lesser amount would need to be reduced by 10% to account for the receiver’s commission, as well as an additional amount to cover the receiver’s applicable expenses.
“Accordingly, the amount raised through the sale of this equipment by the receiver over the next six months, in the best-case scenario, is significantly less than $2 million while IPI is proposing to deposit approximately $2.1 million immediately.”
Moreover, Abikoff said, any auction of casino gaming equipment would likely face extensive and unprecedented additional costs in the form of repairs (including microchip orders and installation), storage fees, shipping materials fees, and shipping fees.
Any auction would be affected by the CNMI’s travel restrictions and quarantine requirements, which make it more difficult for mechanics, potential purchasers, or other relevant personnel to travel to the CNMI and which would lengthen the time and costs of their stay, he added.
The continuation of the pandemic is also likely to limit the market for gaming equipment since travel restrictions and related travel preferences continue to force consumers away from crowded venues, like casinos, the lawyer said.
“IPI’s proposed deposit would undoubtedly place U.S.A. Fanter, IPI, and IPI’s other creditors in a better position than the enforcement of the limited receivership and the sale of IPI’s gaming equipment into a depressed market,” Abikoff said.
The federal court will hear IPI’s request on Nov. 26 at 1:30 p.m.
