The Commonwealth of the Northern Mariana Islands (CNMI) government has opposed Imperial Pacific International (IPI) LLC’s motion to approve bid procedures for the sale of nearly all its assets, arguing that the proposed sale does not adequately benefit the creditors.
Previously, IPI and its creditors’ committee agreed to pursue liquidation in its Chapter 11 Bankruptcy proceedings instead of reorganization.
According to a local media outlet, IPI has now brought this agreement to the attention of the NMI District Court, requesting the chief judge to approve the bid procedures for the sale of most of its assets.
The CNMI government, represented by Chief Solicitor Robert Glass Jr. from the Office of the Attorney General, has filed a motion opposing IPI’s request, arguing that it primarily benefits the proposed “stalking horse” purchaser, Loi Lam Sit, rather than all creditors.
Glass argued that the court should reject the bid procedures because they do not sufficiently benefit the creditors. He stated that the entire process is designed to favor the insider, Loi Lam Sit, who initially proposed a $7 million loan to finance the bankruptcy proceedings but ultimately provided only around $1.5 million for the Chapter 11 liquidation.
Loi Lam Sit was originally approached by the debtor, and this relationship was later redefined as a “friend of the debtor.” According to Glass, this change raises serious doubts about whether Sit is an arms-length buyer or an insider.
Glass further contends that IPI’s proposed bidding process is flawed, as it disregards the lease provisions governing the transfer of the lease. He also points out that the proposed process allows the “stalking horse” purchaser to “win” without demonstrating the ability to complete the building project or the financial capacity to meet the lease terms, which require the hotel’s completion.
A “stalking horse purchaser” refers to an initial bidder selected by a bankrupt company to make the first offer on its assets. This bid establishes the minimum price that the assets can be sold for in a bankruptcy auction. The term “stalking horse” reflects the role of the initial bid in setting a benchmark, encouraging other potential buyers to place higher offers.
Earlier last month, IPI filed a request with the US federal bankruptcy court to approve the sale of its hotel casino and other real estate assets to businessman Loi Lam Sit for $10 million.
