By Bryan Manabat
Saipan--Succumbing to the pressures from its creditors, Imperial Pacific International has filed for Chapter 11 bankruptcy in the U.S. District Court for the NMI, reporting debts totaling of $165.8 million.
According to IPI, the filing of Chapter 11 was a strategic move as part of a comprehensive plan to restructure its financial obligations and position the company for a resilient comeback in the gaming industry.
Before the filing of bankruptcy on April 19, IPI had attempted rigorous legal maneuvering against the Commonwealth Casino Commission,
The commission has yet to render a final decision on the revocation of IPI's casino license for failing to pay its annual exclusive casino license fees and regulatory fees totaling $79.63 million.
Because IPI filed bankruptcy, community members are now calling for the absolute revocation of its license.
But because IPI has filed for bankruptcy, the revocation proceedings by the regulator agency have again stalled.
Chapter 11 bankruptcy allows a business corporation to restructure its debts and continue operating.
IPI was trying to negotiate a settlement agreement with the Commonwealth Casino Commission regarding its unpaid casino license fees and other cited violations when it informed the federal court that it had no income and had no funds in its bank accounts.
Since the closure of its casino operations in March 2020, the casino developer stated that it had very limited resources and no income.
Although IPI has reached out to prospective investors, it failed to acquire new investment and capital to bail it out from its financial and legal issues.
IPI's parent company, IPI Holdings, a Hong Kong-listed company is unfortunately in the same predicament.
IPI Holdings has been ordered “wound up” with a provisional liquidator appointed by the High Court of Hong Kong.
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The High Court of Hong Kong issued the decision after two "winding up petitions" were filed against IPI Holdings for failure to settle the judgment amount of HKD20.83 million (US$2.6 million) and HKD5.3 million (US$676,000) together with interest and costs.
The Hong Kong Stock Exchange has likewise suspended the trading of IPI Holdings since April 1, 2022.
In its bankruptcy petition, IPI listed with the largest unsecured claims were the CNMI Treasury, claiming $62 million for casino license fees; MCC International, $34.9 million for construction services; Commonwealth Casino Commission, $17.6 million for licensing fees and penalties; the law offices of Hughes Hubbard & Reed, $8.58 million for legal fees; Century Estate Investment Ltd., $8 million for an unpaid loan; CNMI Division of Revenue and Taxation, $7.9 million for unpaid business gross revenue tax; and Joshua Gray, $5.68 million for default judgment.
IPI also reported that it owes $4 million to the Internal Revenue Services; $950,000 to the U.S. Department of Labor-Wage and Hour Division; and $1.46 million to the U.S. Department of Justice-Civil Division.
"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," the casino developer stated.
“Our decision to file for Chapter 11 bankruptcy protection was made after careful consideration and with the long-term interests of our stakeholders in mind,” said IPI director Howyo Chi.
“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," he added.
Chi said the Chapter 11 process will allow the company to address its 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."
As part of its reorganization plan, Chi said, "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."
He also added that 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 region's tourism landscape."
"We are confident that the steps we are taking today will pave the way for a brighter future for IPI," added Chi. "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," the IPI official added.
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