CENTURY Estate Investment Ltd., which loaned Imperial Pacific International $9 million, is opposing the petition of Joshua Gray to appoint a receiver to sell the casino investor’s properties.
IPI, in a separate motion, also opposes Gray’s petition for an order to show cause to appoint a limited receiver.
Represented by attorney Matthew Gregory, Century Estate stated that it has first priority as a secured creditor, having executed a loan to financially rescue IPI.
“That loan was secured by a mortgage on the assets that, notably, plaintiff proposes to put into receivership. By virtue of its prior, secured mortgage interest, Century Estate is prior and senior to the rights of all other parties. The amount due and owing on Century Estate’s loan to IPI exceeds the value of the court’s judgement or judgements by any other party or creditor,” Gregory said.
“The appointment of a receiver would hinder Century Estate’s efforts to recoup its superior interest in the secured collateral. Thus, it would be premature and completely inappropriate,” he added.
Gregory said the appointment of a receiver would also conflict with prevailing law protective of priority creditor’s interests.
Century Estate’s motion to intervene in the receivership proceedings was still pending as of Monday.
According to Gregory, Gray failed to articulate how the court should cautiously approach the appointment of a receiver in light of creditor’s secured interests.
“He skips any attempt to resolve the conflict that is created by placement of assets that are collateralized to Century Estate into receivership. Plaintiff’s petition is entirely shortsighted of the interest of creditors such as Century Estate,” the lawyer said as he asked the court to deny the plaintiff’s petition.
IPI, represented by attorney Michael Chen, opposes the appointment of Clear Management as receiver based on IPI’s experience working with Clear Management in the past.
“When Clear Management served as the receiver in the USA Fanter case…, Clear Management may be negligent in allowing its bidders and its employees [or] agents to use heavy machinery to transport heavy items across the marble floor of IPI’s casino, which resulted in significant property damages to IPI,” Chen said.
Background
Gray, IPI’s former director of operations, prevailed in his discrimination lawsuit against the casino investor.
On May 30, 2023, the District Court for the NMI granted Gray a default judgment against IPI. The following day, the court entered a judgement awarding Gray $5,686,182.20 against IPI.
On Oct. 26, 2021, the District Court appointed Clear Management as receiver for the purpose of selling IPI’s gaming equipment to satisfy a judgment awarded to USA Fanter Corporation Ltd.
USA Fanter sued the casino investor 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 IPI’s real property in Garapan.
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.
The District Court issued a final judgment in favor of USA Fanter.
After the court allowed Gray to participate in the receivership proceedings, he applied for a writ of execution, which the court granted, requesting to have IPI’s vehicles, liquor, crystal dragons, computer hardware, furniture and equipment, including casino-related and security equipment, and other non-exempt personal property sold in an auction to satisfy judgment.
Motion to intervene
According to Century Estate’s motion to intervene, on Feb. 1, 2022, it provided a loan to IPI for “the purpose of maintaining ongoing construction, surviving its debts and reviving low cash flow.”
IPI borrowed substantial funds from Century Estate to consolidate debts and to continue in business and continue ongoing construction, Gregory said.
“The substantial funds were provided by Century Estate…on the basis of a loan secured under a mortgage of IPI’s collateralized assets. Thus, Century Estate…has a secured interest in IPI assets that is prior and superior to any other party. Defendant has not made repayment to Century Estate…and is in full default of the loan,” the lawyer said.
“Century Estate Investment Limited now seeks to intervene in this action in order to have the right to move forward and order liquidation of assets toward mitigation of losses from its outlay under the loan,” he added.
According to the promissory note, the first installment of $3 million was due on April 15, 2023; the second installment on Aug, 15, 2023; and the third installment on Dec 15, 2023.
IPI, which listed its personal properties as part of the mortgage, owes Century Estate $9 million plus 8% interest per annum.
