While the liquidation of Imperial Pacific International (CNMI) LLC is on hold, U.S. investors have expressed interest in purchasing IPI’s assets.
Last Tuesday, IPI creditor Dotts law firm challenged IPI’s proposed bidding procedures in a motion seeking approval of the bidding procedures for the sale of substantially all of the debtor’s assets and related relief measures.
The Dotts Law Firm, represented by Michael W. Dotts, argued in its opposition motion that the firm, through its clients, had contracted with an investor who expressed an interest in acquiring the property.
But because the investors are based in the U.S., it’s difficult to conduct due diligence quickly, Dotts said.
“Proper procedures need to be put in place to allow other investors to have access to due diligence materials.” [IPI] You own and control the materials necessary for a potential buyer to consider an investment. These materials include blueprints, construction inspection reports, permits, construction contracts, and estimates of the cost to complete the building. A “bid package” is a [IPI]US potential bidders advise that a bid package is generally provided at the time of the sale of the bankruptcy case. The time for an investor to consider a bid should only start when the bid package is provided. In addition, the investor should be given time to have their own architects and engineers inspect the building or have a neutral architect or engineer provide a report on the condition of the building. The recommended approach is to [IPI] “DIP financing is used to raise funds to hire experts, and providing such reports in your bid package can increase interest in purchasing the property and potentially increase the selling price,” Dotts said.
Dotts added that a “blind bidding process” would be more favorable to creditors to maximize the sale price for IPI’s assets.
“Under the current proposal, if there is an offer for $10.3 million by Nov. 19, 2024, live bidding in $100,000 increments will open in the court that same day. If not, the stalking horse will acquire the property for $10 million. Dotts Law Firm is proposing to submit sealed bids 90 days after the bid package is open to investors. This will encourage the stalking horse bidder to make a higher bid to fend off other potential bidders. If there is more than one bid and there is a significant difference in price, the property can be sold to the highest bidder. However, if there are multiple bids and the prices are roughly comparable, the bid committee can consider other factors, such as the ability of the bidders to actually complete construction of the project. The bid committee includes the creditors’ committee, the U.S. Trustee and the Bureau of Public Lands. It is in the best interest of the CNMI and all of the creditors resident here that the purchaser actually completes the project, not just that the property gets the highest price,” Dotts said.
Earlier this month, IPI filed a motion asking the court to approve a bidding process for the sale of substantially all of IPI’s assets.
According to the motion, IPI and the IPI Creditors Committee have finalized the terms of a proposal to sell substantially all of IPI’s assets to a “stalking horse purchaser.”
A “stalking horse purchaser” essentially agrees to purchase all of the debtor’s assets, subject to a higher and better bid and bankruptcy court approval.
The motion names Roy Lim Sit as the proposed “stalking horse purchaser,” the same person who agreed to lend IPI $1.4 million in debtor-in-possession financing.
Additionally, the motion states that a “stalking horse purchaser” has agreed to purchase all of IPI’s assets for $10 million.
Assets to be acquired include all tangible property, accounts, machinery, equipment, inventory, tenant improvements, goodwill, software and computer programs, hardware, intellectual property, company names, product names, trade names and prepaid expenses.