Liverpool City Council has started legal action against China Town Development Company, the vehicle behind the stalled New Chinatown scheme.
Last week, the council announced that its Cabinet meeting today would be asked to approve the use of Compulsory Purchase powers should the site not be sold and construction activity resumed.
However, the council said that in light of new legal advice and financial information it will not be seeking to use Compulsory Purchase Powers. The council has instead instructed solicitors to start legal proceedings to forfeit two leases on the city centre site. At the same time, a statutory demand has been issued for the outstanding sum of £950,000 owed to the council by the developer.
Should China Town Development Company not make payment by Thursday 10 August, the council will apply to court to wind up the company. If the 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. The council owns the freehold and is the landlord of the leases. The site has planning consent for 790 homes.
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 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. 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.”
North Point Global, parent company of China Town Development Company, said last week that more than £5.7m was raised from the first wave of sales, with 70 flats sold on which 50% deposits were taken on average sales prices of £165,000 for units ranging from £135,000 to £225,000.
A spokesman for NPG told Place North West the deposits are protected in escrow, sitting in solicitors’ accounts, and investors would not lose any money. NPG did not respond when approached for comment today.