IMPERIAL Pacific International has asked the federal bankruptcy court to approve the sale of its hotel casino and other real estate assets to Loi Lam Sit for $10 million.
IPI, through attorney Chuck Choi, requested the court for an order approving the proposed competitive bidding and sale procedures for the sale of IPI’s major assets.
Choi also requested the court for 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, which is 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.
Choi noted that IPI operated a casino for four years until the Covid-19 pandemic forced its closure in March 2020.
Hotel construction ceased in 2021, the attorney said. “Since then, the hotel has been open to the elements and is currently in poor condition,” he added.
“It is estimated that the cost of completing the construction of the hotel will be between $100 million and $150 million.”
“At the final hearing held on June 27, 2024, the Bankruptcy Court approved up to $1.4 million…financing from Loi Lam Sit, on an unsecured administrative priority basis. [IPI] anticipates that this loan will provide the necessary liquidity to pay Chapter 11 administrative costs through year-end,” Choi added.
He said IPI and the Committee of Unsecured Creditors have recently finalized the terms of a proposed sale of most of IPI’s assets subject to court approval and any overbids by qualified bidders.
The terms of the proposed sale and auction of the acquired assets include personal property, designated contracts, real property leases and debtor’s interest in Imperial Pacific Properties LLC.
Among the assets not included in the sale are income tax receivables, the casino license and “any claims related thereto, personnel records, or any books and records relating to patrons of the hotel or casino.”
The proposed sale also requires a $2 million deposit, if and only if the “stalking horse” is the successful bidder.
The proposed closing date is seven days following the entry of an order approving a sale motion. Sale transactions must close by Dec. 31, 2024.
According to Choi, IPI “submits that the [proposed] bidding procedures provide a necessary and actual benefit to the estate. The bidding procedures establish the parameters under which the value of these assets may be tested at a public auction. The terms and conditions of the auction will enable the trustee to realize the maximum value of the acquired assets, and thus ensure that the auction is in the best interest of the estate and creditors.”
