Berline: IPI bankruptcy ruling closes ‘an important chapter’

Attorney Bruce Berline said the oral ruling approving the structured dismissal of Imperial Pacific International (CNMI) LLC's Chapter 11 bankruptcy case marks what he believes is the closing of "an important chapter" in Commonwealth history, although the written dismissal order had not yet been entered.

Speaking with Marianas Press after the Aug. 4 hearing, Berline said, "I think the judge today kind of closed an important history, a chapter in history, of the CNMI with what we hope is the dismissal of the IPI bankruptcy. That's been ongoing for several years now."

While acknowledging that the case appears to be nearing its conclusion, Berline said many involved remain dissatisfied with the outcome.

"I'm pretty sure a lot of people are not happy with the result, but it seems to be concluded now, so that's a positive note," he said.

Asked about discussion during the hearing over the possibility of future asset recoveries and reopening the bankruptcy case, Berline said he believed U.S. Bankruptcy Judge Robert J. Faris took the appropriate approach.

"I think Mr. Glass (J. Robert Glass Jr., chief solicitor and chief of the Office of the Attorney General’s Civil Division) brought that up and it didn't appear that there was any real viability to that claim, and so I think the judge probably did the right thing," Berline said. "It's like you've got to end it at some point and I think there's probably, as he stated on the record, some avenues if that ever comes to fruition, but I don't think it will."

When asked whether the ruling represented the "final nail in the coffin" for the bankruptcy case, Berline replied, "I think so."

He added that despite the apparent conclusion of the proceedings, many creditors were unlikely to be satisfied.

"I don't think anybody's happy, really. I think a lot of people are disappointed that pennies on the dollar came after this big bankruptcy and a lot of people took a big loss. But, like I said, it's resolved now, so everybody just has to find a way to move forward," he said.

According to the official court minutes, Faris orally approved the joint motion filed by IPI and the Official Committee of General Unsecured Creditors seeking a structured dismissal of the Chapter 11 case after hearing arguments from counsel and the U.S. Trustee. The judge also approved all uncontested compensation applications and approved inclusion of a limited exculpation provision in the proposed dismissal order over the U.S. Trustee's objection.

The minutes show attorney Christopher Wong argued in support of the motion and the proposed exculpation language, while Assistant U.S. Trustee Amy Lambdin maintained that exculpation was not appropriate in a structured dismissal and should be removed from the proposed order. Glass also raised the issue of potential future recoveries from an existing judgment and requested language addressing how any such proceeds should be handled.

The hearing transcript shows Faris concluded that the possibility of future, currently unanticipated asset recoveries should not delay distributions to creditors. Instead, he directed that the proposed dismissal order provide that, should additional assets later be recovered, any party in interest may move to reopen the bankruptcy case so those proceeds can be administered and distributed through appropriate proceedings.

Faris also explained on the record that he approved inclusion of the limited exculpation provision because, based on his oversight of the case and review of the record, he concluded the professionals involved had satisfied the applicable standard of care throughout what he described as an exceptionally difficult bankruptcy proceeding.

At the conclusion of the hearing, Faris directed Wong to prepare the proposed dismissal order and coordinate submission of the compensation orders before the case is formally closed. As of Tuesday afternoon, Aug. 4, the court had not yet entered the written dismissal order.