Court denies motion to convert IPI’s bankruptcy to Chapter 7

The NMI Bankruptcy Court has denied the CNMI government’s motion to convert Imperial Pacific International (CNMI) LLC’s Chapter 11 Bankruptcy to a Chapter 7 Bankruptcy which essentially means the liquidation of all IPI’s property and assets to pay off debts.

During a status conference last week on IPI’s bankruptcy proceedings, Chief Judge Ramona V. Manglona denied the CNMI government’s previous motion to convert IPI’s Chapter 11 Bankruptcy to a Chapter 7 Bankruptcy.

While Chapter 11 Bankruptcy allows for a business/individual to reorganize and restructure, Chapter 7 Bankruptcy essential means the complete liquidation of a business’ property and assets which may result in the company’s dissolution.

The CNMI government, through Office of the Attorney General chief solicitor Robert Glass Jr., asked the court to withhold its ruling to which the court declined.

In addition, the bankruptcy court judge denied the U.S. Trustees’ alternative request (dismissal) finding that it is not in the best interest of IPI creditors or the estate.

“Dismissal is not warranted at this time. Case is to proceed as a Chapter 11 liquidation,” said the judge.

As for the U.S Trustees’ request for the court to appoint a Chapter 11 trustee, the court did not decide stating that the request would require a separate notice and hearing.

In related news, IPI has filed a motion asking the court to approve bid procedures for sale of substantially all of IPI’s assets.

According to the motion, IPI and a committee of IPI creditors have finalized the terms of a proposed sale of essentially all of IPI’s assets to a “stalking horse purchaser.”

A “stalking horse purchaser” essentially agrees to buy all of a debtor’s assets subject to higher and better bids and subject to approval by a bankruptcy court.

The motion named Loi Lim Sit as the proposed “stalking horse purchaser,” the same individual who agreed to loan IPI $1.4 million in debtor-in-possession financing.

The motion further states that the “stalking horse purchaser” has agreed upon a purchase price of $10 million for all of IPI’s assets.

The assets to be acquired includes all tangible property, accounts, machinery, equipment, inventories, tenant improvements, goodwill, software and computer programs, hardware, intellectual property, company names, product names, trade names, prepaid expenses, and more.

Manglona has scheduled a status conference on the matter for Nov. 20, 2024.