Council says developer owes £950,000 in missed staged payments
Liverpool council has begun legal action against the developer of Blok Architecture’s £200m New Chinatown scheme, where work has been stalled for almost a year.
The local authority has served Chinatown Development Company (CDC) with a forfeiture notice for two leases on the city centre site.
Additionally, the council has issued a statutory demand for a sum of £950,000 which it says is owed to the council by CDC. If no payment is received by August 10, the council will apply to wind up the developer in court.
However, CDC has accused the council of a “witch hunt”.
CDC, owned by North Point Global, acquired three leases on the site in June 2015, one for each of the intended three phases of the project. In December 2015, the council approved plans for the first phase, which comprised 790 homes, 120,000sq ft of commercial space and a 131-bed hotel, and outline planning for the other two phases.
But according to the council, the developer failed to make two staged payments of £475,000 each during 2016, and in the autumn, its contractor PHD1 went into administration, causing work on the site to stall.
The council, which owns the freehold of the Chinatown site, said its position had “hardened in light of new legal advice and financial information” received this month, and that talks with the developer has broken down.
Councillor Ann O’Byrne, deputy mayor of Liverpool, said: “LCC [the 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 CDC 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.
“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.”
In a statement, CDC said: “Unfortunately the relationship between CDC and the council has broken down. LCC has issued proceedings against the company which will be vigorously defended.
“The company has previously worked in conjunction with LCC to deliver a sale of the site… which failed to come to fruition after five months of negotiations. As a result of the deal not going ahead, CDC incurred huge legal fees and substantial decommissioning costs for stopping work on Phase 1.
“On 3 May 2017, CDC served notice to complete the purchase of Phase 2 Chinatown. The council rejected this notice and the funds.
“CDC has been in negotiation for the sale of the whole site with various parties but… has only had the opportunity to negotiate with prospective purchasers since the beginning of April 2017. However CDC has formally agreed terms for a sale which is currently in the hands of solicitors who are drafting contract documentation.”
Liverpool New Chinatown development – timeline
- June 2015: CDC acquires the site, at the time called Tribeca, to create a housing and leisure scheme called New Chinatown.
- December 2015: Phase 1 of the scheme is granted detailed planning consent. Outline planning consent is given for phase 2 and 3.
- April 2016: A 250 year lease on phase 1 is granted.
- August 2016: CDC fails to make staged payment of £475,000.
- Autumn 2016: Work on site stalls after building contractor goes into administration.
- December 2016: CDC fails to make another staged payment of £475,000.
- July 2017: LCC‘s talks with CDC break down. The council issues the developer with a statutory demand for the unpaid £950,000 and serves a forfeiture notice on two leases for phases 1 and 3.