Oceanwide Plaza Developer Facing Potential Liquidation After Contractor Demands $28M
The hits keep coming for the Oceanwide Plaza project in Downtown Los Angeles, but this time their repercussions could go beyond the property itself, with its developer facing a crucial deadline Monday that could impact the future of the company.
Earlier this month, China Oceanwide Holdings Ltd., the parent company of project developer Oceanwide Plaza LLC, told shareholders in a filing that Lendlease U.S. Construction, the former general contractor on the Oceanwide Plaza project, filed a statutory declaration demanding approximately $28.4M Lendlease says it is owed by Oceanwide.
In its filing with Hong Kong regulatory officials, Oceanwide told shareholders that Lendlease gave it up to three weeks from the July 10 filing date — July 31 — to pay. If the debt isn't cleared, Oceanwide said Lendlease may file a winding-up petition, an action that could ultimately force a liquidation, a winding down of the company and the sale of assets, in order to get paid. Lendlease exited the project in 2021.
It isn't clear exactly where the $28.4M figure comes from, but Oceanwide’s announcement refers to both a 2021 arbitration judgment that found Oceanwide owed Lendlease about $42.6M and a subsequent agreement to pay off that debt in installments. Lendlease declined to comment due to pending litigation. A representative for Oceanwide didn't respond to a request for comment.
The announcement from Oceanwide is a reminder that financial troubles are still unfolding around the site of the incomplete project in which Oceanwide invested more than $1B and which could now be sold at auction as soon as next month.
In June, The Real Deal reported that Oceanwide had defaulted on a $157.4M EB-5 loan tied to the project and that the sale of Oceanwide Plaza could be scheduled after Aug. 8.
There are also outstanding debts on the project relating to its construction. A number of contractors on the project had filed mechanics liens for approximately $200M on the property, with the earliest liens dating back to 2019. But those who haven’t already been paid might be left waiting.
An LA Superior Court judge ruled in February that the EB-5 lenders who contributed to the project had a more senior position in lien priority than the project’s unpaid contractors, meaning the EB-5 lenders would be paid first if there were a default. Courthouse News reported in February that some contractors’ liens had been paid off, but “the largest claims remain unpaid.”
Oceanwide had previously said both that it was in talks to sell the project and was speaking with lenders to get financing to complete the project. It anticipated it would take upward of $1B to complete Oceanwide Plaza.
