HKE liabilities at $273.5M, not $258.5M; assets at $55.2M

The owner of Tinian Dynasty Hotel & Casino has amended its petition for bankruptcy to reflect that its total liabilities is actually $273.5 million, not $258.5 million. Its total assets remain at $55.2 million.

As this developed, Hong Kong Entertainment (Overseas) Investments Ltd., owner of Tinian Dynasty, asked the U.S. District Court for the NMI on Thursday for permission to pay taxes and fees that may become due while the bankruptcy petition is pending.

HKE estimates it owes the Internal Revenue Service $315,989.69 in withholding taxes and the CNMI government $372,456.96 in taxes, for total tax liabilities of $688,443.65.

In its amended Chapter 11 bankruptcy petition filed last week, HKE, through counsel Timothy H. Bellas, said it owes $194.9 million to creditors who have claims secured by property; $76.32 million to creditors who have unsecured claims; and $2.24 million to creditors who have claims of non priority amount of unsecured claims, for total liabilities of $273,462,659.18.

The amended petition also disclosed that HKE’s real property is worth $51.27 million and personal property is $3.94 million, for total assets of $55,213,814.37.

According to the original petition, HKE owes $175.28 million to creditors who have claims secured by property; $76.79 million to creditors who have unsecured claims; and $6.41 million to creditors who have claims of non priority amount of unsecured claims, for total liabilities of $258,482,942.47.

In HKE’s motion last week, Bellas said only the hotel portion of the business is operational right now, despite Dynasty having paid its gaming license fee until Dec. 31, 2015.

Bellas said the casino remains closed, based in part on the finding by the Tinian Casino Gaming Commission that HKE has not paid all taxes due to the local municipality.

Bellas said the failure to pay taxes and fees would be disruptive to HKE’s efforts to continue doing business and to re-organize. He said the payment of taxes does not impair existing assets and therefore is not detrimental to existing creditors.

Bellas earlier disclosed that one of their first priorities will be to ask the bankruptcy court for permission to pay the unpaid salaries of Tinian Dynasty employees and unpaid federal and local taxes.

Among the creditors listed as having priority unsecured claims are the U.S. Department of the Treasury Financial Crimes of Enforcement Network, which has a total claim of $75 million.

HKE president Chun Wai Chan filed the petition.

According to Chan, the board agreed that it appears prudent and essential to seek the protection of the bankruptcy court in order to have the opportunity to formulate a plan for the rehabilitation of the corporation through reorganization.

Last June, FinCEN assessed the civil penalty of $75 million against HKE for “willful and egregious violations” on the Bank Secrecy Act.

Last July, the federal court dismissed the criminal charges against HKE after the company and the U.S. government entered into a non-prosecution agreement that requires Tinian Dynasty to forfeit $3.04 million—the largest forfeiture ever collected by the U.S. in the CNMI.