In a significant development regarding the liquidation of Imperial Pacific International (CNMI) LLC (IPI), a group of creditors has taken steps to ensure that the assets of the collapsed casino operator are sold in a manner that maximizes their value. The creditors argue that selling the casino as a functioning entity, rather than merely as real estate, will yield better returns for stakeholders.
The Collapse of Imperial Pacific International
Imperial Pacific International, once a prominent casino operator on Saipan, has faced financial turmoil in recent years, culminating in its bankruptcy filing. The company filed for Chapter 11 bankruptcy in April 2024, seeking a way to manage its debts, which exceed $100 million. This financial distress has led to the closure of its casino at the Imperial Palace • Saipan since early 2020, leaving numerous creditors and stakeholders in limbo.
Current Bankruptcy Proceedings
In August 2024, IPI submitted a motion to liquidate its real estate assets, which include the hotel and casino building that previously operated as the Imperial Palace • Saipan. However, this proposal notably excluded the sale of its exclusive casino license, which is critical to the operation of any gaming facility on the island.
Creditors’ Response: Seeking a Holistic Approach
The official committee representing IPI’s general unsecured creditors has filed a motion with the Northern Mariana Islands’ bankruptcy court. They are seeking permission to engage Intrepid Investment Bankers LLC to identify potential buyers who may have been overlooked in IPI’s previous efforts.
In their motion, the creditors’ committee argues that a holistic approach—marketing the business as a complete operation rather than as mere real estate—would attract more interest from potential buyers in the gaming and hospitality sectors. They believe this strategy will ultimately enhance the overall value of IPI’s assets, providing a better return for creditors.
The Argument for Including the Casino License
The creditors committee highlighted a significant concern regarding the exclusion of the casino license from the liquidation process. They assert that this exclusion could deter interested investors who might be willing to operate the property as a casino. According to the committee, the Commonwealth Casino Commission (CCC), while stating that a casino license would not be granted to IPI or its affiliates, has indicated a willingness to collaborate with independent bidders interested in acquiring a casino license.
By marketing the assets solely as real estate, IPI risks missing out on bids from operators in the gaming industry who would find the potential for a casino operation appealing. The creditors argue that adopting a comprehensive approach would effectively communicate the opportunity to purchase both the casino license and the property as a functioning casino. This strategy could significantly enhance the overall value of the estate.
The Implications of the Ongoing Regulatory Battle
The situation is further complicated by the ongoing conflict between IPI and the CCC regarding the state of the casino license. Since early 2021, the casino license has been suspended, and the CCC had been preparing to hold revocation hearings. However, these proceedings were halted once IPI filed for bankruptcy.
This regulatory uncertainty poses challenges for potential buyers, as the ability to operate a casino is directly tied to the status of the license. The creditors committee believes that by addressing these regulatory concerns upfront and incorporating the casino license into the sale, they can attract serious bidders and ultimately secure a better financial outcome.
Strategic Asset Disposition: A Win-Win for Creditors
The creditors’ committee maintains that it has a fiduciary duty to explore all possible avenues for maximizing the value of IPI’s assets. By hiring a specialized investment banker, they hope to effectively market the casino as a viable business opportunity. Their plan is structured to encompass a comprehensive approach that includes multiple facets of asset disposition.
The Path Forward: Potential Challenges Ahead
Despite the creditors’ proactive stance, several challenges remain. Regulatory hurdles may present significant barriers to attracting potential buyers. The CCC’s ongoing stance regarding the casino license must be addressed to reassure bidders that they will be able to operate the casino successfully. Additionally, the current state of the gaming industry, particularly in Saipan, will influence the number of interested buyers. The creditors’ committee must ensure that they position the assets attractively to overcome any market hesitance.
Furthermore, the dynamics among various creditors may lead to potential conflicts in decision-making regarding the sale process. Ensuring that the interests of all parties are aligned will be crucial to moving forward effectively.
As Imperial Pacific International navigates the complexities of bankruptcy, the creditors’ committee’s proposal to adopt a comprehensive approach to asset sales marks a crucial step towards maximizing recovery for stakeholders. By strategically marketing the casino and its license together, they aim to unlock the full potential value of IPI’s assets, providing a more favorable outcome in what has been a challenging financial landscape.
Moving forward, the outcome of this approach will depend heavily on the ability to engage potential buyers, resolve regulatory concerns, and effectively communicate the value proposition of the assets as a cohesive business opportunity. The creditors are committed to ensuring that all avenues are explored to secure the best possible financial recovery for those impacted by the collapse of Imperial Pacific International.