IPI requests another $1M in DIP financing

Imperial Pacific International (CNMI) LLC has amended its request with the NMI Bankruptcy Court and instead of debtor-in-possession financing for just the remaining $6.6 million of a $7-million loan it previously identified, the casino investor is asking the court to approve DIP financing for the remaining $6.6 million and an additional $1 million.

During a hearing last Friday, NMI Bankruptcy Court Chief Judge Presiding Ramona V. Manglona addressed IPI’s motion for an order authorizing the casino investor to obtain a post-petition secured indebtedness, or DIP financing, for a $7-million loan it identified.

IPI attorney Chuck Choi further arguments as to the DIP loan and made an oral amendment to the motion and requested for an additional $1 million as opposed to the $6.6 million, on the same terms the court previously approved in the interim order authorizing an initial withdrawal of $400,000.

After making the oral motion, Christopher Wong, the proposed pro hac vice attorney for IPI’s creditors, made arguments and stated the creditor’s position and requested that IPI provide a revised budget.

Meanwhile, attorney Joey San Nicolas, attorney for IPI’s financer Loi Lam Sit, informed the court that he met with Sit on June 19, via WhatsApp, and discussed terms of the loan. He represented that Sit does not oppose the additional $1 million as suggested by IPI.

San Nicolas further stated that Sit is prepared to file a supplemental declaration identifying himself and provide biodata.

Office of the Attorney General’s Robert Glass Jr, attorney for the CNMI, objected IPI’s request for additional financing.

Attorney Aaron Halegua, who represents IPI creditor Joshua Gray, also objected to the casino investor’s request of additional funding.

The court informed the parties that it is inclined to continue the matter to next week to allow IPI to produce a revised budget to justify the request for additional funds.

The court has continued the hearing for IPI’s DIP financing request for June 27.

In related news, Choi clarified for the court that the interim DIP financing of $400,000 was received last week.

The court ordered IPI’s Howyo Chi to make payment to Department of Public Lands in the amount of $207,000.

According to Saipan Tribune archives, last week, the official committee of general IPI unsecured creditors, through attorneys Aram Ordubegian and Christopher K.S. Wong, filed a supplemental opposition to the final approval of the motion for order authorizing DIP financing for the remaining $6.6 million of the $7-million loan IPI has allegedly secured.

Essentially, IPI managed to secure a $7-million loan from a Hong Kong-based financing institution. However, DIP financing through the court is needed to ensure that should IPI fail in its attempt to restructure and must liquidate all assets to pay off creditors, the lender and its loan is given priority.

According to the motion, during the May 30 hearing, the court granted IPI’s motion on an interim basis, authorizing IPI to obtain an initial advance of $400,000 of the $7 million from Mr. Loi Lam Sit.

In doing so, the court emphasized the need for IPI to supplement its motion to address a number of concerns which were, and continue to be, shared by the committee, the CNMI government, and other parties before final approval of the loan can be properly evaluated.

The committee states that at the top of the list of concerns is the lack of evidence justifying the need for the remaining $6.6 million for the debtor’s reorganization, and the concealed nature of the lender’s identity and connection to this case.

“It must be reiterated the debtor has the burden of proof, by a preponderance of the evidence, to demonstrate that an additional $6.6 million in financing from this obscure source is ‘actual’ and ‘necessary’ to the bankruptcy estate. Yet, with creditors eagerly waiting, the debtor only submitted a one-and-a-half page, woefully deficient declaration from the Lender that neglects to address crucial concerns regarding the lender’s background, his relationship with the debtor and its insiders, and his motives for providing the DIP loan. Instead of clarifying these issues, it raises further questions,” said the motion.

The committee says that IPI has provided limited and vague information about the lender, mentioning his status as a businessman in Hong Kong and his lack of familial ties to Ji Xiaobo and Cui Lijie.