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New Chinatown stalemate – a salutary lesson for Hull’s regeneration?

Our expert commercial solicitor and director Simon Young explores…

It was intended as a flagship development to regenerate an area of the former European Capital of Culture, Liverpool.

But it’s turned into a fiasco with anger, recriminations and potential financial loss on all sides.

As our city of Hull basks in the reflected light of its own cultural year, there are lessons to be learned for our own army of entrepreneurs and developers, who are fired up to ensure a positive future legacy from 2017.

Liverpool’s New Chinatown was to be a stunning, £200million development next to the city’s Chinatown, featuring hundreds of homes as well as shops and restaurants. It had also attracted significant investment from Hong Kong and China.

But building work on the site ceased in 2016 after a number of disputes arose between the developer and the local authority.

As a result, building work remains firmly on hold.

The latest twist

In July 2017, the local authority instructed solicitors to start legal proceedings to forfeit two leases on the development site. In addition, a statutory demand was also issued for an outstanding sum said to be owed to the local authority.

Liverpool City Council warned that if the developer did not make the payment by the time specified, it would apply to court to ‘wind up’ the company. In order to avoid this, the developer filed for an injunction in an attempt to prevent Liverpool City Council from taking this step.

Upon hearing the application, Mr Justice Barling concluded that insolvency proceedings were not the appropriate vehicle for resolving what he considered to be a genuine dispute on substantial grounds.

He said: “If the council consider that, despite the evidence adduced by the company, it is not able to pay the sum alleged to be outstanding, then it could apply for the sum in question to be paid into an escrow account or into court, pending resolution of the issues raised in the Part 7 proceedings…...”

The full judgment can be viewed using via this link:

http://www.bailii.org/ew/cases/EWHC/Ch/2017/3347.html

Emerging from the recent hearing, spokesmen for both Liverpool City Council and the developer made it clear that neither party appears willing to back down.

The above comments are likely to have caused great alarm amongst all involved because, if this plays out, a protracted dispute appears to be inevitable which will no doubt result in financial and legal consequences for all of those involved in the redevelopment project.

If you’re affected

What’s happened with New Chinatown is a prime example of what can go wrong. In a city like Hull, where there is so much potential, and significant investment and development going on at the moment, there are particular lessons to be learned. It’s vital to seek legal advice when getting involved in a scheme like this, to make sure you and your business are as protected as possible.

As business lawyers, we offer expert advice on a broad range of disputes, acting on behalf of individuals, limited liability partnerships and limited companies on a variety of commercial issues, ranging from professional negligence to commercial contract disputes, construction matters and property/land disputes.

If you’re implicated in the New Chinatown issue – or are wondering how to protect you and your company from issues like this – get in touch with Simon for some considered advice, via simon.young@jameslegal.co.uk or (01482) 974481.

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