Imperial Pacific Losing Ground in Saipan as License Structure Likely to Be Changed
Posted on: November 8, 2021, 11:15h.
Last updated on: November 9, 2021, 10:26h.
The failed casino operator behind Saipan’s Imperial Palace is close to the end of its operations. This week, the US District Court for the Northern Mariana Islands granted a motion to appoint a limited receiver. It also ordered all gaming equipment owned by Imperial Pacific International (CNMI) LLC to be sold.
Clear Management Ltd., headed by Tim Shepherd, co-founder of Silver Heritage Group, was appointed receiver to “administer, collect, or sell any casino gaming property in which [IPI] has an interest, and to do any other acts to satisfy the judgment,” according to the court ruling.
The judgment states that Shepherd previously valued IPI’s gaming equipment at $2.25 million.
IPI Digs Its Own Grave
The judgment is a result of the approximately $2.1 million owed to USA Fanter Corporation by IPI for construction work at Imperial Palace, which IPI failed to pay. In January 2020, legal action was initiated, just one of many that have surfaced against the company over the past several years. It has continuously struggled to comply with its regulatory and financial duties and began having assets seized earlier this year.
IPI failed to pay its annual $15.5-million license fee in August 2020 and its annual $3.1-million regulatory fee in October 2020. It also reneged on its mandatory $20-million contribution to the CNMI’s community benefit fund in 2018 and 2019 and didn’t maintain its minimum $2-billion capital requirement. In addition, it didn’t follow a CCC order that it pay all money owed to its vendors and is also required to pay $5.4 million to a small group of former employees.
With IPI owing more than $40 million to regulators and millions more to vendors, the government is finally taking action to seize assets and sell them to cover the company’s debts.
IPI was also given a six-month notice to pay the casino license fee and regulatory fee. IPI could also be fined $6.6million or have its license revoked. Since then, the company has filed an administrative request to the Superior Court of Saipan for a judicial review into its suspension of license. IPI confirmed that the judicial appeal is still ongoing this week.
New Casino Licenses Could Come to Saipan
For years, the idea of expanding Saipan’s limited casino market has been circulating. However, repeatedly, gaming regulators have denied any expansion. This was partly fueled by IPI’s claim that it had contractual exclusivity in the region. That could now change with the suspension of the operator’s license.
CNMI House Floor Leader Ralph N. Yumul has introduced a bill that would allow up to five casinos to operate in Saipan and the CNMI, According to Marianas Variety.
“The present situation, where the exclusive casino licensee has not been able to pay taxes and, most relevantly, cannot reliably pay the $15 million guaranteed license fee, demonstrates that it was imprudent for the Commonwealth to rely on just one industry and just one company,” House Local Bill 226 states.
HLB H.L.B. Public Law 18 56, which legalized Saipan’s casino gaming, originally had the intent to provide reliable funding sources for pensions.
Retirees’ Pensions Not Currently Covered
The bill adds that while it was risky for retirees’ pensions to be tied to one industry, it is riskier to tie it up to an exclusive licensee. Saipan Legislative Delegation to the Northern Islands urged that lawmakers “move away from the current single licensee framework” to improve stability and dependability.
The bill reads that local legislation will allow up to five separate entities. By increasing the number of locally licensed casinos, there is more economic support for the industry, because casinos can compete and still work together, sharing costs and expenses for promoting the industry and bringing visitors, to the benefit of the CNMI.
It is believed that the system will pose less risk to all parties by increasing the number of licenses and requiring $3 million in annual fees instead of $15 million from one company.
The present exclusive casino license holder has strongly indicated that it cannot or will not be paying its $15 million fee in full, its annual $3 million regulatory fees to the Commonwealth Casino Commission, nor does it intend to pay its community benefit obligation,” asserts House Local Bill 226.
These indications, along with a history of financial difficulty, made it apparent to the Saipan government that the time is right to establish an industry local to succeed, as opposed to failing, as stipulated by House Local Bill 226.
Related News Articles
Related News Articles
May 12, 2022 — 4 Comments—