City council begins legal action over stalled £200m development
Liverpool City Council has begun legal action against the tenant company of the stalled £200m New Chinatown development.
The local authority said it had instructed solicitors to start legal proceedings to forfeit two leases on the city centre site.
A statutory demand has also been issued for the outstanding sum of £950,000 owed to the council by developer Chinatown Development Company Ltd. A forfeiture notice on two leases for phases 1 and 3 has been deemed served as well.
The council warned that if Chinatown Development Company did not make the payment by 10 August, the authority would apply to court to ‘wind up’ the company. If that petition is successful, the court will put an official receiver in charge of the liquidation.
“In this event, the council would seek repayment and look to work with the liquidator to find a solution to the stalled site as the city council also owns the freehold and is the landlord of the leases,” Liverpool said.
The council said its position had hardened in light of new legal advice and financial information which meant the site would not be marketed for sale. The council added that it would not be seeking to use compulsory purchase powers, as set out in a cabinet report drafted six weeks ago.
The scheme was intended to create a new urban quarter with 790 new homes, 11,246 sqm of commercial and retail floor-space and a 140 bed hotel.
Cllr Ann O’Byrne, Deputy Mayor of Liverpool, said: “Liverpool City Council has explored every avenue and worked with the developer in the proposed transfer of the Chinatown site to a new buyer, but insufficient progress has been made.
“There are a number of challenges which could affect the transfer to any new buyer and in light of new legal advice and financial information, the approach to market the site has become unviable.
“We have sought reassurances from Chinatown Development Company Ltd but regrettably an agreement could not be reached and the council has been left with no choice but to take this new course of action.”
She added: “The council remain committed to the redevelopment of the site and if a liquidator is appointed, we will seek a quick resolution to get the scheme back on track.
“Although the council has no contractual obligations to any investor, we fully appreciate their concerns and the council will look to work with the liquidator in a proactive way to find a solution to the stalled site.”
In a statement to the BBC, the Chinatown Development Company said any legal proceedings would be “vigorously defended”.
It said that the relationship between the company and the council had broken down.
The council seemed determined to make the sale process “as difficult as possible to progress", the developer claimed.
