Lendlease Calls for Involuntary Bankruptcy of Oceanwide Plaza Owner
The three-tower Oceanwide Plaza project has been defaced with graffiti in recent weeks. (Getty)
By Jack Witthaus
CoStar News
February 15, 2024 | 8:28 AM
The general contractor for the unfinished Oceanwide Plaza project in Los Angeles is taking legal action to force the sale of the indebted property that's attracted international attention in recent months.
Lendlease filed a petition on Tuesday for the involuntary Chapter 11 bankruptcy of China Oceanwide, the owner of the three-tower project, according to court documents. An involuntary bankruptcy would result in the court appointing a trustee to oversee the sale of Oceanwide Plaza, according to a statement by Lendlease. The proceeds from the sale would go to Oceanwide's creditors, including Lendlease.
"Only then can this unfinished project move forward for the good of the local community," a Lendlease representative told CoStar News via email.
The move is the latest in a yearslong legal battle for the contractor and China Oceanwide. Lendlease has alleged nonpayment for services related to the development since 2021, when the company received a judgment against China Oceanwide's parent company for roughly $42.7 million in connection with the Los Angeles project.
In August, California’s Court of Appeal issued a temporary stay order prohibiting China Oceanwide from proceeding with a planned foreclosure sale of the property in order to ensure Lendlease would receive payment priority over other creditors.
Involuntary bankruptcy petitions are usually filed by creditors when debtors refuse to pay alleged debts. China Oceanwide has said for years in court filings it doesn't have enough money to complete the Los Angeles project.
The legal move comes as the unfinished project continues to attract trespassers, graffiti on dozens of floors and, most recently, nighttime parachute jumpers in images that have gone viral online. Meanwhile, officials with the city of Los Angeles have voted to demand the owner clean up and secure the property by this weekend, or risk turning over the property.
Finding a Buyer
China Oceanwide has been attempting to sell the property for years, though some prospective investors have said the project needs a different design as real estate demands have shifted since construction began in 2015. Oceanwide Plaza was expected to feature upscale condominiums, a five-star hotel, a mall and the largest LED sign on the West Coast.
At least one party has declared it isn't interested in buying Oceanwide Plaza: the city of Los Angeles. Councilmember Kevin de León said on Friday it would cost at least $500 million to buy the property and another $1 billion to finish the project. The city also would need to resolve roughly $500 million in liens related to the property, de León said.
"We need someone to stand up with deep pockets," de León said on Friday.
City council members voted last week to force China Oceanwide to clean up the graffiti by Feb. 17. If the owner fails to do so, the city plans to clean the property up itself and bill the developer. A failure to pay the city may result in Los Angeles placing a lien on the Oceanwide Plaza property.
It's unclear how an involuntary bankruptcy petition affects the city's plans to clean up the site. A representative for de León's office didn't respond to an emailed request to comment from CoStar News.
A China Oceanwide representative didn't respond to an emailed request to comment from CoStar News. The involuntary bankruptcy petition was filed in the U.S. District Court for the Central District of California.