By Bryan Manabat
Saipan-- The District Court for the NMI has given Clear Management the green light to auction Imperial Pacific International's properties and gaming equipment by Aug. 30.
The sale of IPI's assets would satisfy the court's judgment in a lawsuit filed by seven construction workers alleging forced labor and human trafficking, which led to receivership established in U.S.A. Fanter Corp. v. Imperial Pacific International (CNMI).
This developed after the $150 million capital infusion previously promised by the Korean-based IH Group to IPI failed to materialize.
In May, IH Group said it would provide IPI funding to reopen its casino and pay some of its obligations to its vendors, including payroll.
Chief Judge Ramona V. Manglona in an order issued on Aug. 18, granted the construction workers' request and lifted the stay on the limited receivership of IPI.
Manglona ordered Clear Management, the court-appointed receiver, to proceed with the auction of IPI's properties and directed IPI to lodge any objections to the listed inventory of items to be sold from Clear Management's website no later than Aug. 30.
Manglona previously asked the parties to brief the issue of the appropriate scope of what items are included in the limited receivership and may be sold by Clear Management.
While seeking the dissolution of the entire limited receivership, IPI argued that the gaming machines cannot be sold.
However, IPI did not provide an analysis based on the court’s orders as to what items should or should not be sold by Clear Management.
Because IPI failed to follow the court's request, Manglona found that all IPI “casino utilities” previously examined and identified by Clear Management can be sold.
"Clear Management examined a March 2020 list provided by IPI that identified 404 electronic gaming machines as well as 185 units of what Clear Management labeled 'casino utilities,' which primarily includes devices used to count, shuffle, or deal cards," Manglona wrote. "Therefore, these gaming machines and the playing card utilities, to the extent they can be found, may be sold by Clear Management.”
Clear Management is authorized to sell all gaming equipment identified during the inspection to fulfill the judgment in this matter, the order added.
Manglona noted that IPI’s lawyer had previously produced a list of assets that contained 39 pages of gaming equipment, including hundreds of chairs and stools, poker chips, playing cards, security or surveillance equipment, and other items.
"These too have been included in the scope of IPI assets that can be auctioned off," she said.
“The understanding that the parties and the court proceeded with was that Clear Management could sell those assets from IPI’s list that it identified during the inspection. Subsequently, the inventory listed by Clear Management on its auction website after inspecting the IPI premises included not only slot machines, but also gaming tables, chairs, and stools; and chips, cards, cash counters, safes, card shredders, locks, and surveillance system equipment. These items, too, are included in the scope of the limited receivership,” Manglona said.
The plaintiffs were previously employed by IPI’s former contractor and subcontractor, MCC International and Gold Mantis, both of which have already settled with the workers.
On May 26, 2021, the federal court entered a default judgment in favor of the workers plus post-judgment interest and attorney’s fees for a total amount of $5.9 million.
Because of IPI’s failure to satisfy the judgment, the federal court granted the plaintiffs’ plea for the seizure of IPI’s personal property, including its casino gaming machines.
On March 16, the court granted a stipulation, filed in the Fanter case between the plaintiffs and IPI, that stayed the enforcement of the writ.
Under the stay agreement, the court amended the receivership in the Fanter case to add the seven workers as additional creditors with the right to step into the shoes of Fanter to enforce the judgment owed to the plaintiffs.
The lawsuit was filed by Tianming Wang, Dong Han, Yongjun Meng, Liangcai Sun, Youli Wang, Qingchun Xu and Duxin Yan.
In that stay agreement, IPI recognized that in the event it failed to comply with the stay agreement, the plaintiffs would have the right to proceed with enforcement via receivership. On May 27, Manglona found that IPI had defaulted on the agreement.