The owner of Tinian Dynasty Hotel & Casino has filed for bankruptcy not to go out of business, but to continue doing business.
Hong Kong Entertainment Investments Ltd. (HKE), which owns the Tinian Dynasty casino on the Commonwealth of the Northern Mariana Islands, filed a Chapter 11 petition in the U.S. District Court on Friday, citing insufficient assets to meet its liabilities.
Based on the petition, HKE’s total assets amounted to $55.2m, comprising more than $51.3m from real property and $3.9m from personal property. However, the company’s summary of liabilities amounted to $285.5m—$175.8 million is owed to creditors who have claims secured by property; $76.7m for priority unsecured claims; and $6.4m unsecured claims.
HKE legal counsel Timothy Bellas said that the purpose of Chapter 11 is not to go out of business but to continue doing business. One of HKE’s priorities would be to ask the court to pay the unpaid salaries of Tinian Dynasty employees as well as federal and local taxes.
There are over 200 creditors listed in the 49-page document, including TV stations and local newspapers for advertising, airline flights for tour companies, and obligations to government agencies and private businesses. Among the creditors are the U.S. Department of the Treasury’s Financial Crimes of Enforcement Network, Internal Revenue Service, and the CNMI Treasury.
The filing came a day after HKE was given a go signal by the Tinian Casino Gaming and Control Commission to reopen the resort casino on Tuesday. The casino was shut down in September by its previous owner due to lack of guests following typhoon Soudelor.
The bankruptcy came as no surprise as according to HKE, its board held a special meeting in November to discuss the corporation’s financial condition. The board was advised that filing of Chapter 11 is necessary for the company “to avoid the possibility that the assets of the corporation will be insufficient to meet the obligations based on litigation expenses and possible liabilities, which may result from unliquidated but disputed claims.”
The meeting concluded with an agreement that filing for bankruptcy would be in the best interest of the corporation. Chairman and president of the board of directors Chun Wai Chan was authorized on behalf of the corporation to prepare any documents necessary for the filing.
Bellas also stated that the filing is not yet complete and the company will provide updated pleadings in the coming weeks.