THE federal bankruptcy court has denied the CNMI government’s motion to convert Imperial Pacific International’s Chapter 11 petition to a Chapter 7 petition.
Chief Judge Ramona V. Manglona also found that dismissal of IPI’s Chapter 11 petition is not warranted yet.
At a hearing on Aug. 14, Chief Solicitor J. Robert Glass Jr., who represented the CNMI government, requested the court to withhold its ruling, but Judge Manglona declined to do so.
She said the case will continue as a Chapter 11 liquidation, but she did not decide on the Committee of Unsecured Creditors’ request for an appointment of a Chapter 11 trustee, which requires a notice and a hearing.
Attorney Aram Ordubegian, who represented the Committee of Unsecured Creditors, requested the court to rule on the joint motion of IPI and the committee, specifically as to extending the claims bar date.
The U.S. Trustee, represented by attorney Neil Verbrugge, said they do not oppose the motion.
Attorney Richard Miller, who represents some of the creditors, expressed his support for extending the deadline and for having a website for proof of claim.
Judge Manglona granted the joint motion in part and extended the deadline for the claims bar date to Oct. 31, 2024.
The CNMI government earlier informed the court that IPI had no ability to generate revenue or operate as a casino and had “no business to reorganize.” The CNMI government also requested the court to convert IPI’s Chapter 11 petition to a Chapter 7 petition.
Under the U.S. Bankruptcy Code, Chapter 11 bankruptcy allows a business corporation to restructure its debts and continue operating while Chapter 7 provides for the liquidation of a debtor’s property and distribution of proceeds to creditors.
The Office of the U.S. Trustee also asked the court to convert the case “due to [IPI’s] alleged continuing losses, no likelihood of rehabilitation, and lack of insurance.”
Recently, IPI requested the court to approve the sale of its hotel-casino and other real estate assets to Loi Lam Sit for $10 million.
IPI attorney Chuck Choi also requested the court to hold a hearing on Nov. 20, 2024 to consider the final approval of the sale of IPI’s property, free and clear of liens and encumbrances to Loi Lam Sit — the “stalking horse purchaser” — or to a higher bidder.
According to online sources, a “stalking horse purchaser” refers to an initial bidder chosen by a bankrupt company to make the first offer on its assets. This bidder sets the minimum price that the assets can be sold for in a bankruptcy auction. The term “stalking horse” comes from the idea that the initial bid serves as a benchmark, encouraging other potential buyers to make higher offers.
Lam, a resident of Hong Kong, is the general manager of Top Pride International Ltd., a wholesale distributor of cosmetic products.
IPI said its major real estate assets are its casino, which is housed in its hotel building situated primarily on 19,204 square meters of land leased from the CNMI Department of Public Lands pursuant to lease agreement No. LA-15-002S; and IPI’s ownership interest in Imperial Pacific Properties LLC, which holds a leasehold interest in eight lots adjacent to the leasehold property.
IPI filed for Chapter 11 bankruptcy in the District Court for the NMI on April 19, 2024, saying it owed creditors over $165.8 million.
