Liverpool City Council has begun legal action against Chinatown Development Company over a stalled £200m mixed-use development in the city centre.
The New Chinatown scheme, which was to comprise 790 homes, 120,000 sq ft of offices, a 140-bedroom hotel and a Chinese shopping area, was part of a £24bn “Northern pitchbook” of investment opportunities showcased by former chancellor George Osborne on a trade mission to China in September 2015.
The mission was hailed as the start of “a new era in UK-China relations”.
However, a series of delays and disputes have dogged the project, which is backed by Chinese investors and the UK Trade and Investment’s Regeneration Investment Organisation.
The council has now instructed solicitors to start legal proceedings to forfeit two leases on the city centre site after a series of delays to the scheme. A statutory demand has also been issued for £950,000 that the council said is owed to it by the developers. Chinatown Development Company, a subsidiary of North Point Global, said the legal proceedings will be “vigorously defended”.
The developer had pledged to start work on the scheme in early 2016 and complete phase one by the middle of 2017. North Point Global said in November that more than half of the 790 flats have already been pre-sold to UK and overseas investors.
Work on the site stalled in autumn 2016 when the building contractor PHD1 went into administration. Chinatown Development Company is accused of failing to make two staged payments of £475,000 to the council in August and December of that year.
In June 2017 Liverpool City Council’s cabinet issued a draft report seeking the sale of the site and compulsory purchase order powers. The council said talks with the developer subsequently broke down and after seeking legal advice it has decided against recommending a sale and using CPO powers.
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 that 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 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.”
Chinatown Development Company said it was the victim of a “witch hunt” by the council.
In a statement, the company said: “As LCC is aware, CDC have been in negotiation for the sale of the whole site with various parties but LCC seems determined to make this process as difficult as possible to progress. CDC has only had the opportunity to negotiate with prospective purchasers since the beginning of April 2017.
“Three months is not a great deal of time to negotiate a sale for a site of this magnitude. However, CDC has formally agreed terms for a sale that are currently in the hands of solicitors, who are drafting contract documentation.
“LCC has previously attempted to block a sale by CDC on the basis that it required the property to be placed on the open market, but CDC received legal advice that LCC is not in a position to dictate who CDC sells Chinatown Liverpool to.”
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