IPI files for Chapter 11

Imperial Pacific International (CNMI) LLC, which has been the subject of multiple civil lawsuits amounting to a debt of over $150 million, has officially filed for bankruptcy with the U.S. District Court for the NMI.

Last Friday, IPI filed for Chapter 11 bankruptcy with the District Court for the NMI.

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 week 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.

Although IPI did not specify in its form 204 how much—in assets—they have left, in a previous court filing, IPI’s attorney Michael Chen gave some insight into IPI’s financial standing.

Specifically, Chen—in response to former employee Joshua Gray’s petition to show cause why the court should not enter an order holding IPI and its executive director in contempt for not complying with a previous order—told the federal court that IPI has no income and has no funds in its bank accounts.

Chen said in his filing that since the closure of its casino operations in March 2020, IPI has had very limited resources and no income.

“To maintain security at Imperial Pacific Resort, IPI has been borrowing funds to pay the current security guards. IPI has great difficulties in finding a lender who is willing to extend any credit to IPI to cover its ongoing operating expenses. IPI has no funds in its bank accounts. IPI has no liquid assets other than assets which are under the control of Clear Management,” Chen said.

‘We remain committed to fulfilling our obligations’

Yesterday, IPI 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.

“This strategic move is part of a comprehensive plan to restructure its financial obligations and position the company for a resilient comeback in the dynamic gaming industry. Despite the temporary closure of its operations and the financial strain endured during the pandemic, IPI remains steadfast in its commitment to its employees, stakeholders, and the CNMI. Through this reorganization process, IPI aims to emerge as a stronger, more sustainable entity that will continue to contribute to the economic growth and prosperity of the CNMI community,” said IPI.

Howyo Chi, IPI director, said IPI’s decision to file for Chapter 11 bankruptcy protection was made after careful consideration and with the long-term interests of their stakeholders in mind.

“We have arranged for sufficient debtor in possession financing that will ensure that IPI can meet its post-petition obligations, including making millions of dollars in payments to the Commonwealth Casino Commission once a settlement with the Commission is finalized. The Chapter 11 process will allow us to address our financial challenges head-on, while preserving jobs, honoring our commitments to vendors and suppliers, and revitalizing our operations to deliver exceptional gaming and entertainment experiences,” he said.

As part of its reorganization plan, IPI will focus on enhancing operational efficiencies, optimizing its gaming offerings, and implementing robust measures to ensure the health and safety of its patrons and employees.

“Additionally, the company remains committed to fulfilling its obligations to the CNMI government, including the completion of the Imperial Pacific Resort, a landmark project that will further elevate the tourism landscape of the region. We are confident that the steps we are taking today will pave the way for a brighter future for Imperial Pacific International (CNMI) LLC,” Chi said.

“With the unwavering support of our dedicated team, loyal customers, and the CNMI community, we are poised to emerge from this process stronger and more resilient than ever before. IPI is working closely with its legal and financial advisors to expedite the Chapter 11 bankruptcy process and achieve a successful reorganization. The company remains committed to transparency and will provide updates on its progress as it works towards a brighter tomorrow,” Chi added.