IPI creditors ask court to lift stay on liquidation of IPI’s personal property

Imperial Pacific International (CNMI) LLC creditors have filed a motion with the U.S. District Court for the NMI asking the court to lift the automatic stay and allow court appointed receiver Clear Management Ltd to proceed with the sale of IPI’s personal property.

IPI creditors Joshua Gray and USA Fanter Corp. (both of whom were granted a limited receivership for the sale of IPI’s personal property prior to IPI filing for bankruptcy), have filed a motion asking the federal court to lift the automatic stay on the sale of IPI’s personal property.

According to court documents, prior to IPI’s bankruptcy petition, Gray and USA Fanter acted expeditiously to obtain writs of execution against IPI’s personal property, levy upon those writs, and began liquidating the property subject to those writs. They claim they should be allowed to proceed.

“The automatic stay has been devastating to Clear Management, Ltd. who spent $40,550 preparing for a vehicle auction, whose staff member has now left because no work can be done, and who is fielding emails from bidders asking that their money be returned. [Gray and USA Fanter] will suffer as the personal property depreciates and may be damaged or stolen if the stay is not lifted,” said the motion.

The creditors argue that IPI has no ownership interest in the personal property and it is not needed for a reorganization.

As relief, the creditor is asking the court for an order finding that the personal property subject to their respective receiverships is not “property of the estate” under Bankruptcy Code §541 and thus the automatic stay does not apply to the continued liquidation of that property to satisfy their judgments.

As an alternative relief, should the court hold that IPI’s personal property is property of the estate, pursuant to Bankruptcy Code §362(d), the creditors ask that the court modify and lift the automatic stay to allow Gray and Fanter to exercise their rights with respect to IPI personal property.

Another alternative, the creditors suggest, is for the court to find that IPI does not have an equity in the personal property and such property is not necessary to an effective reorganization.

The creditors also ask that the court require IPI to make protection payments to Gray and Fanter for any diminution in value of the personal property under Bankruptcy Code §361 caused by the delay in lifting the stay.

Last April 19, IPI filed a voluntary petition under Chapter 11 of the Bankruptcy Code with the District Court for the NMI declaring bankruptcy.