US investor interested in IPI property

The liquidation of Imperial Pacific International (CNMI) LLC remains pending with a U.S. investor coming into the picture by expressing interest in purchasing IPI’s property.

Last Tuesday, IPI creditor Dotts Law Office objected to the bid procedure proposed by IPI in its motion to approve bid procedures for the sale of substantially all of the debtor’s assets and related relief.

In its opposition motion, the Dotts Law Office, represented by Michael W. Dotts, said it has been in contract with an investor through a client and that the investor has expressed an interest in acquiring the property.

However, because the investor is based in the United States, Dotts said it makes it difficult to conduct due diligence quickly.

“A proper procedure needs to be put in place so that other investors can obtain due diligence material. [IPI] is in possession and control of material needed for potential purchasers to consider the investment. These materials include blueprints, construction inspection reports, permits, constructions contracts, and estimates of what it will cost to complete the building. A ‘bid package’ should be assembled by [IPI]. The potential bidder from the United States has advised that bid packages are generally provided when properties are sold in bankruptcies. The time for investors to consider bidding should only start to run when they are provided with the bid package. Further, investors should either be provided time to have their own architects and engineers inspect the building, or a neutral architect or engineer should provide a report on the condition of the building. The preferred approach would be for [IPI] to fund hiring the expert using the DIP financing. Providing such a report with the bid package may increase the interest in the purchase of the property and result in a higher sales price,” said Dotts.

Dotts added that to maximize the sale price of IPI’s property, a “blind bidding procedure” would be more favorable to the creditors.

“The current proposal is that if an offer of $10,300,000 is made by Nov. 19, 2024, live bidding in $100,000 increments will be triggered at the court that same day. Otherwise, the stalking horse gets the property for $10,000,000. The Dotts Law Office proposes that 90 days after the bid package is made available to investors, sealed bids be submitted. This will encourage the stalking horse bidder to make a higher bid to fend off potential other bidders. If one or more bids are received, and if there is a substantial difference in price, the property can be sold to the highest bidder. However, if more than one bid is received, and if the prices are roughly equivalent, a bid committee can consider other factors, such as the ability of the bidders to actually complete construction of the project. A bid committee can include the creditors committee, the United States Trustee, and the Department of Public Lands. It is in the best interest of the CNMI and of all creditors who reside here that not only the highest price is obtained for the property, but that the purchaser actually completes the project,” said Dotts.

Earlier this month, IPI 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.