{"id":414002,"date":"2024-09-06T14:00:00","date_gmt":"2024-09-06T14:00:00","guid":{"rendered":"https:\/\/www.saipantribune.com\/?p=414002"},"modified":"-0001-11-30T00:00:00","modified_gmt":"-0001-11-29T14:00:00","slug":"IPI-creditors-not-satisfied-with-bid-price-proposed","status":"publish","type":"post","link":"https:\/\/www.saipantribune.com\/index.php\/IPI-creditors-not-satisfied-with-bid-price-proposed\/","title":{"rendered":"IPI creditors not satisfied with bid price proposed"},"content":{"rendered":"

The official committee of general unsecured creditors have a filed an opposition to Imperial Pacific International (CNMI) LLC\u2019s motion \u201cto approve bid procedures for sale of substantially all of the debtor\u2019s assets and related relief\u201d as they are not satisfied with the bid price of $10 million proposed in liquidation of the casino property.<\/p>\n

The official committee of general unsecured creditors, through attorneys Aram Ordubegian and Christopher K.S. Wong, have filed an opposition to IPI\u2019s motion \u201cto approve bid procedures for sale of substantially all of the debtor\u2019s assets and related relief\u201d due to concerns regarding the proposed bid of $10 million in the liquidation of the casino property and other IPI assets.<\/p>\n

Specifically, the committee of IPI creditors feel the proposed bid was lowballed and unfairly favors \u201cstalking horse purchaser\u201d Loi Lam Sit, the same person who agreed to lend IPI over $7 million in debtor-in-possession financing pursuant to bankruptcy court\u2019s approval.<\/p>\n

\u201cThe motion contemplates a sale of only the debtor\u2019s leasehold interest and related personal properties at a lowball and arbitrarily set price to Mr. Sit\u2013\u2013the DIP lender with dubious connections to the debtor and its principals. Indeed, the proposed bid procedures unfairly favor Mr. Sit, without ever requiring him to demonstrate his ability to satisfy the leasehold obligations, his wherewithal to operate a hotel, or his connections to the debtor (i.e., whether any side agreements or conditions have been established for him to receive this sweetheart deal),\u201d said the group\u2019s lawyer Ordubegian.<\/p>\n

Ordubegian adds that at this juncture of the case, the primary objective must be to maximize returns for creditors, including the Commonwealth, local vendors and suppliers, and former employees. However, this doesn\u2019t seem to be the case therefore IPI\u2019s motion must be denied.<\/p>\n

\u201cThe only viable outcome, therefore, is the sale of the debtor\u2019s assets through a strategic marketing process to bring it to an operating casino and hotel, ensuring not only the highest possible recovery for the creditors but also securing the tax revenue, tourism, and job creation that it would bring to Saipan. As demonstrated herein, the motion must be denied as the proposed bid procedures would necessarily tie to a sale that fails to satisfy the most basic obligation of a Chapter 11 debtor\u2014to maximize returns for the creditors,\u201d said Ordubegian.<\/p>\n

\u201cThe proposed bid procedures raise significant concerns for several reasons: (a) the stalking horse bid price appears to be artificially low, (b) the debtor has failed to engage in any meaningful marketing process to solicit other potential buyers, and (c) the relationship between Mr. Sit and the debtor\u2019s owners, as well as his overall intentions, remain murky at best,\u201d Ordubegian adds.<\/p>\n

Ordubegian further argues that IPI\u2019s actions\u2014or lack thereof\u2014suggest a hasty acceptance of the unfavorable terms, which is not inevitable.<\/p>\n

\u201cThe Commonwealth Casino Commission has stated that it will not restate a casino license to the debtor or parties connected to the debtor. However, the CCC has indicated a willingness to work with disinterested bidders for granting a casino license. By excluding the casino license from the scope of \u2018acquired assets,\u2019 the proposed bid procedures fail to capture the cumulative value of the assets as a casino hotel and dissuades potential buyers in the gaming\/gambling industry from ever submitting a bid. Instead, the debtor proposes bid procedures which have been narrowly tailored to serve the interests of Mr. Sit, who does not qualify to operate a casino,\u201d said Ordubegian.<\/p>\n

In addition, Ordubegian states that IPI has viable alternatives, such as fulfilling its commitment to the committee to engage an investment banker to properly market the assets, potentially securing a \u201cstalking horse\u201d bid that truly reflects the assets\u2019 value.<\/p>\n

However, this value remains uncertain given that no appraisal or market test has been conducted since the Chapter 11 filing.<\/p>\n

\u201cSuch process could have also attracted higher and better offers from other potential buyers to serve as the stalking horse bidder. This concern is further underscored by the opposition filed by creditor Dotts Law Firm, which indicates that an investor has expressed interest in acquiring the debtor\u2019s assets and argues that the proposed bid procedures unfairly favor the insider. The current stalking horse bid, as it stands, does not represent a sound exercise of the debtor\u2019s business judgment. Therefore, approval of the debtor\u2019s proposed bid procedures would allow Mr. Sit to swoop in and obtain the assets at a low, arbitrarily set price of only $10 million, which \u2018chills\u2019 the bidding process by dissuading third parties from submitting their highest and best offers,\u201d Ordubegian said.<\/p>\n

The committee, Ordubegian further states, has identified an investment banker to facilitate a going-concern sale of the debtor\u2019s assets.<\/p>\n

\u201cThis approach is crucial to maximizing the chances of a favorable outcome in this case, not only for the creditors but also for the community of Saipan. Accordingly, the committee intends to file the employment application before the hearing on the motion, seeking the court\u2019s approval to retain its own investment banker under Section 1103(a) of the Bankruptcy Code,\u201d he said.<\/p>\n

The NMI bankruptcy court is set to hear all oppositions on Sept. 19.<\/p>\n

<\/p>\n

The Imperial Pacific Resort Hotel in Garapan.<\/p>\n

-KIMBERLY B. ESMORES
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The official committee of general unsecured creditors have a filed an opposition to Imperial Pacific…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-414002","post","type-post","status-publish","format-standard","hentry","category-local-news"],"_links":{"self":[{"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/posts\/414002","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/comments?post=414002"}],"version-history":[{"count":0,"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/posts\/414002\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/media?parent=414002"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/categories?post=414002"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/tags?post=414002"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}