THE federal bankruptcy court has ordered Loi Lam Sit to explain in writing why he should not be held in contempt for failing to comply with federal subpoenas filed by creditors Joshua Gray and the CNMI government.
Chief Judge Ramona V. Manglona ordered Sit to respond by today, Wednesday, Sept. 18.
She ordered the petitioners to serve a copy of the order on Sit through email to Joey P. San Nicolas, Sit’s counsel of record.
The judge also ordered the movants to file a proof of service with the court.
“The movants may file a reply [that shall not exceed five pages] to Mr. Sit’s submission by Friday, Sept. 20, 2024 at 12 p.m. An order to show cause hearing is hereby set for Tuesday, Sept. 24, 2024, at 8:30 a.m. Mr. Sit is ordered to appear,” the judge said.
Earlier, Imperial Pacific International 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, 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 or to a higher bidder.
Sit, a resident of Hong Kong, is the general manager of Top Pride International Ltd., a wholesale distributor of cosmetic products, IPI said.
Chapter 11
IPI filed for Chapter 11 bankruptcy on April 19, 2024, saying it owes creditors over $165.8 million.
Chapter 11 bankruptcy allows a business corporation to restructure its debts and continue operating.
Among the IPI creditors with the largest unsecured claims were the CNMI Treasury with $62 million for casino license fees; MCC International, $34.9 million for construction services; Commonwealth Casino Commission, $17.6 million for licensing fees and penalties; the law offices of Hughes Hubbard & Reed, $8.58 million for legal fees; Century Estate Investment Ltd., $8 million for an unpaid loan; CNMI Division of Revenue and Taxation, $7.9 million for unpaid business gross revenue tax; and Joshua Gray, $5.68 million for default judgment.
IPI also owes the Internal Revenue Service $4 million; the U.S. Department of Labor-Wage and Hour Division, $950,000; and the U.S. Department of Justice-Civil Division, $1.46 million, labeled as “contingent disputed.”
Subpoenas
Gray, represented by attorney Aaron Halegua, and the CNMI government, represented by Chief Solicitor J. Robert Glass Jr., told the court that they delivered a notice and subpoena to Sit to appear for a deposition on Sept. 13 and to produce certain documents.
They said Sit failed to comply with the subpoenas.
They petitioned the court to issue an order to show cause why it should not enter an order (i) holding Sit in contempt; (ii) compelling Sit to promptly produce the requested documents and appear for a deposition; (iii) imposing a daily fine of $2,000 until Sit complies; and (iv) awarding attorneys’ fees and costs to the movants.
According to the petition, the “expedited schedule is necessary in order for the discovery to take place prior to the hearing on [IPI’s] pending motion before the Court to approve its bid procedures for the sale of substantially all of [IPI’s] assets.”
The attorneys also requested the court to deny the bid procedures motion.
They are still seeking “an opportunity to depose Mr. Sit about his ability to pay the bid price, ability to fund and oversee the completion of the hotel, the value that he ascribed to the personal property and the basis for that valuation, and other important topics.”
They asked the court to order Sit to comply with the subpoenas to appear for a deposition and produce documents.
They also want the court to “continue the hearing on the bid procedures motion — or at least withhold a decision — until such limited discovery may be concluded.”
