A committee of creditors claiming they are owed money by embattled Saipan casino operator Imperial Pacific International (CNMI) LLC have questioned the identity of an individual set to provide a US$7 million loan to IPI and his connection to the company.
As per a Saipan Tribune report, the committee last week filed a supplemental opposition to the final approval of a motion for order authorizing DIP financing for the remaining US$6.6 million of the $7-million loan IPI says it has secured to help it restructure.
The court has previously authorized an initial advance of US$400,000 of the total loan amount from the lender, named as Mr Loi Lam Sit of Hong Kong.
However, with Debtor-in-possession (DIP) financing through the court still required to ensure that the lender and loan is given priority should IPI fail in its attempt to restructure, the committee has questioned the need for the additional loan given existing debts as well as the identity of the lender.
Its motion reads, “It must be reiterated the debtor has the burden of proof, by a preponderance of the evidence, to demonstrate that an additional US$6.6 million in financing from this obscure source is ‘actual’ and ‘necessary’ to the bankruptcy estate.
“Yet, with creditors eagerly waiting, the debtor only submitted a one-and-a-half page, woefully deficient declaration from the Lender that neglects to address crucial concerns regarding the lender’s background, his relationship with the debtor and its insiders, and his motives for providing the DIP loan. Instead of clarifying these issues, it raises further questions.”
The motion notes that IPI’s declaration “fails to include [the lender’s] contact information, disclose any prior relationship with [IPI executives Ji Xiaobo and Cui Lijie] or explain why Mr Ji approached him specifically for the loan.
“This scant detail does not provide the court and interested parties with sufficient basis to determine that the Lender is acting in good faith. Further, a revised loan agreement addressing the court’s concerns is nowhere to be found. It has become evident that the debtor has not been forthcoming with the court, consistently providing only minimal information regarding the proposed Lender’s background and the source of the DIP funds.”
The committee has called on the court to deny IPI’s loan request and require it to seek funding elsewhere, accusing IPI of falsely claiming it will use US$6.15 million of the funds to settle amounts outstanding with the Commonwealth Casino Commission (CCC) – despite no evidence that the regulator would agree to that amount.
“The CCC has unequivocally stated that no settlement is being negotiated, let alone agreed upon,” the motion states. “Consequently, approving the DIP loan on a final basis is premature, unwarranted, and counter to the interest of the estate and creditors.”
The CCC had planned a series of revocation hearings in relation to IPI’s casino license – which has been suspended since early 2021 – but has been unable to proceed since the company filed for Chapter 11 bankruptcy in April.
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