Is this the year IPI will finally unload its Saipan casino?

The turbulent history of Saipan casino operator Imperial Pacific International may finally be nearing an end. Imperial Pacific International (IPI) has identified its own potential buyer, and a creditor wants a bankruptcy court to consider a second bidder.

Now, a second prospective bidder has emerged from the US. According to the Saipan-based Dotts Law Office, the unnamed entity needs time to complete its due diligence before considering an offer on the property.

Saipan’s once lavish resort now deteriorating

Imperial Pacific Palace is a beachfront resort in Garapan, Saipan, part of the Commonwealth of the Northern Mariana Islands (CNMI), a US territory. A federal bankruptcy court is hearing the case.

The unfinished resort opened in 2016. It was still unfinished in March 2020, when it closed due to the Covid-19 pandemic. Construction ceased in 2021, IPI defaulted on millions in annual fees, and the Commonwealth Casino Commission (CCC) suspended its gaming license.

The property never reopened. Since then, said IPI attorney Chuck Choi, it has been “open to the elements, and is currently in poor condition.”

Who is Loi Lam Sit?
Choi asked the court to OK a sale of the property to Hong Kong businessman Loi Lam Sit. In media reports, Lam has been described as general manager of a cosmetics distributor. He offered a $7m loan to help IPI pay its debts to the CCC. That offer brought pushback from a creditors’ committee, which called him an “obscure source.”

“With creditors eagerly waiting,” members wrote, IPI “submitted a one-and-a-half page, woefully deficient declaration from the lender that neglects to address crucial concerns regarding his background, his relationship with the debtor and its insiders, and his motives for providing the (debtor-in-possession) loan. Instead of clarifying these issues, it raises further questions.”

The more bidders, the better
Dotts asked the court to entertain other investors, including the unnamed US entity. The law firm requested a bid package with inspection reports, construction estimates and other details to help investors make informed offers.

Dotts contends a “blind bidding procedure” would be better for IPI’s creditors. Spokesman Michael Dotts added that IPI should get top dollar, from a purchaser who can actually finish and reopen the property.

Bidding war ahead?
As recently as May, IPI insisted that, despite evidence to the contrary, it could still “make a resilient comeback in the dynamic gaming industry.”

CNMI officials countered that IPI’s bankruptcy petition should switch from Chapter 11, for reorganization, to Chapter 7, for liquidation, as the Hong Kong company “has no business to reorganize.” The office of the U.S. Trustee agreed, citing IPI’s “alleged continuing losses, no likelihood of rehabilitation, and lack of insurance.”

As for the final disposition, in the case of two or more bids, a bid committee can consider factors including “the ability of the bidders to actually complete construction,” said Dotts. That job is a big one, estimated at between $100m and $150m.

IPI owes its creditors a collective $166m.