The unfinished Imperial Pacific International hotel-casino in Garapan.
Photo by Bryan Manabat
FEDERAL Bankruptcy Court Judge Robert J. Faris has ordered Imperial Pacific International to show cause why its Chapter 11 bankruptcy case should not be dismissed or converted to Chapter 7.
Judge Faris wants IPI to provide proof that it has renewed or replaced its recently expired liability insurance policy by June 19. If not, he said the court will enter an order dismissing IPI’s case without further notice or hearing.
“Unless the case is dismissed earlier, the court will hold a hearing on June 27, 2025, at 9 a.m. to consider whether to dismiss this case, convert this case to Chapter 7, or appoint a Chapter 11 trustee,” the judge said in his order on Friday.
IPI operated a casino on Saipan for four years until the Covid-19 pandemic forced its closure in March 2020.
On April 19, 2024, IPI filed for Chapter 11 bankruptcy, citing over $165.8 million in debts.
Chapter 11 allows corporations to restructure while continuing operations, whereas Chapter 7 bankruptcy involves the liquidation of a debtor’s assets to repay creditors.
In a court-approved auction on Feb. 26, 2025, Team King Investment (CNMI), LLC was the successful bidder for IPI’s casino assets.
Judge Faris approved the sale of IPI’s assets to Team King Investment on April 29, following a stipulation by the parties that resolved the objection of some creditors.
But according to the judge’s recent order to show cause, IPI has reported that it has little or no cash and, as a result, was unable to renew its public liability insurance when the policy expired. In addition, the security guards protecting the debtor’s property have not been paid for about a month.
“The only realistic prospect of a resolution of this case is the closing of the court-approved sale of the debtor’s primary assets, but that sale has not closed due to disputes between the purchaser and the CNMI government,” the judge said.
“The debtor’s inability to provide insurance necessary to protect the public is cause to immediately dismiss or convert this case under Section 1112 of the Bankruptcy Code. Its inability to pay other operating expenses and to dispose of its assets may also amount to cause,” the judge added.
“Conversion of this case to a Chapter 7 case or the appointment of a Chapter 11 trustee would likely be fruitless because a trustee under either chapter would have no funds with which to obtain appropriate insurance and carry out the trustee’s duties. Therefore, dismissal, rather than conversion or the appointment of a trustee, would be in the best interests of creditors and the estate,” the judge said.
At a status hearing on June 13, Team King, represented by attorney Louie Yanza, informed the court of his client’s efforts to resolve outstanding matters with the Department of Public Lands.
But attorney Neil Verbrugge, on behalf of the U.S. Trustee, expressed concerns regarding the debtor’s lack of funds, the ongoing delay in closing the sale, and the lack of liability insurance.
He also raised concerns about the nonpayment of security guard services.
The CNMI government, represented by Chief Solicitor General J. Robert Glass Jr., informed the parties what requirements must be met before a lease transfer can occur.
Saipan Stevedore Company Inc., represented by attorney Vince Seman, requested IPI’s attorney Chuck Choi to provide a precise valuation of the assets, suggesting to the court to consider a potential sale of those assets.
Seman also noted that his client has continued to pay insurance on its property to store IPI’s 28 containers and is requesting compensation for storage costs.
He also sought permission to remove the containers.
Attorney Choi requested a 10-day extension to obtain insurance, which the judge denied, imposing instead a firm one-week deadline from June 13.
However, the court said Choi can file a renewed request “if diligence in resolving the issue can be demonstrated.” But the judge said that such a request may or may not be granted.
