Creditors to file motion to dismiss IPI’s bankruptcy petition

Claiming that Imperial Pacific International (CNMI) LLC is abusing the Chapter 11 bankruptcy process, IPI creditors gave the U.S. District Court for the NMI notice that it will be filing a motion to dismiss the casino investor’s bankruptcy petition.

Last week, IPI creditor Joshua Gray (through attorneys Bruce Berline and Aaron Halegua) filed an opposition to a number of IPI’s motions in relation to its Chapter 11 bankruptcy petition.

Gray, who has an outstanding federal court judgment of over $5 million, stated in its motion that IPI is abusing the Chapter 11 process in attempt to delay revocation of its license, avoid contempt proceedings, and slow the liquidation of its property.

Because of this, Gray informed the court that he and other IPI creditors expect to file a motion seeking to dismiss IPI’s bankruptcy petition.

“IPI no longer has any ‘operating business’ that can be restructured. Gray expects that he and/or other creditors will be filing a motion to dismiss the bankruptcy petition. Indeed, IPI’s parent company tried to argue before the High Court in Hong Kong that it planned to restructure its businesses in order to defeat a ‘winding up’ petition. However, the high court found that IPI had no means or realistic prospect of actually paying off its debts or reorganizing the company,” said Gray.

Creditors Artman Corp., Fujitec Pacific, Inc., GT Building Systems International PTD, Ltd., Hermine Ipwan Islam dba Ipwan Security Services, U.S.A. Fanter Corp., Ltd., James Whang dba South Pacific Lumber Co., and Hughes Hubbard & Reed LLP have all filed joinders essentially piggybacking off of Gray’s opposition.

Gray, in its motion, claims that IPI is not operating in good faith.

“In its ‘first-day motions,’ the debtor is requesting the court to issue an order that approves a DIP loan arrangement for which it provides few facts, to approve monthly payments to the debtor’s counsel, to approve PTO payments that accrued several years ago, and various other relief. The debtor is seeking to have these motions granted prior to IPI providing any specifics about its finances, and without giving IPI’s creditors a fair opportunity to analyze or object to these Motions,” said Gray.

First, Gray explains, IPI filed an “emergency” motion for these motions to be heard the same week that they were filed. However, there is no actual emergency.

“The debtor’s bankruptcy counsel still has a significant retainer of $38,592.70 that should certainly fund at least a few weeks of work. There also must be other funds available to pay security guards, litigation counsel, etc., because IPI has been funding these things for years at this point despite the casino being closed since 2020. Therefore, there is no reason that IPI must be approved to incur an additional $7 million in loans so urgently,” said Gray.

Second, Gray says IPI should be asking for an interim order granting its motions, but instead is trying to persuade the court to enter a permanent order.

“IPI has not even provided the required schedules of its assets and liabilities, or details of its plan, but still asks the Court to issue a permanent order,” said Gray.

Overall, Gray said that IPI has provided no schedules of its assets and liabilities, and zero details of its reorganization plan despite having already retained bankruptcy counsel for many months.

“No relief requested by should be granted. For instance, how much real estate does IPI own and what is the income? How did IPI find over $150,000 to bid on a Rolls Royce? What happened to the $20 million paid to Ji Xiaobo? Was IPI not prepared to pay over $49 million just weeks ago in order to avoid the revocation of its license? These questions must be answered before any of these motions should be considered,” said Gray.

Last April 19, IPI officially filed for Chapter 11 bankruptcy as it owes creditors over $160 million.

According to the United States Courts website, Chapter 11 bankruptcy (if granted) essentially provides the entity filing for this chapter of the bankruptcy code the opportunity to reorganize. This usually means the debtor will have a chance to propose a plan of reorganization to keep its business alive and pay creditors over time.

IPI filed a form 204 last April 19 listing down its creditors with the largest unsecured claims which only includes 20 of IPI’s creditors. It is known that IPI has a long list of creditors both in federal and local courts. Based off IPI’s form 204 alone, IPI owes its most notable creditors a whopping $165,814,049.83.

The Top 3 creditors with the highest judgments against IPI are the CNMI Treasury (for nonpayment of casino license fees), MCC International Saipan, and the Commonwealth Casino Commission.

CNMI Treasury reported that IPI owes $62,010,280. As for MCC, IPI owes the entity $34,993, 862; while the casino investor owes CCC $17,620,000 for licensing fees and penalties.

IPI, for its part, issued a press release stating that although it has decided to file for bankruptcy protection in the federal court, it remains committed to fulfilling its obligations.