Bermuda Court Orders Liquidation of China Oceanwide Holdings

China Oceanwide Holdings Ltd.-which in recent months has defaulted on loans tied to two of the largest developments in Los Angeles and San Francisco-is facing court-ordered liquidation after a Bermuda court issued a winding-up order against the company.

The Beijing-based firm disclosed the order in a filing with the Hong Kong Stock Exchange, Bloomberg reported. The report said liquidators have been appointed and the company’s shares have stopped trading.

A winding-up order is a court order to close down a company and liquidate its assets, following a winding-up petition filed by a creditor after unsuccessful attempts to recoup their money.

The winding-up petition that triggered the court order in Bermuda was filed in June 2022 by New York-based lender DW Partners, the report said. The complaint involved China Oceanwide’s failure to pay a $175.4M loan on 80 South Street, a residential development project slated to be one of Lower Manhattan’s tallest skyscrapers.

China Oceanwide, which has invested a total of $3.5B in the US, also has defaulted on its largest projects in California.

In June 2023, a notice was filed in Los Angeles County stating that China Oceanwide had defaulted on $157M it owed to a group of EB-5 lenders on the largest development under construction in Downtown Los Angeles, a trio of towers known as Oceanwide Plaza.

In filings with the Hong Kong Stock Exchange, the Beijing firm said it would need more than $1.2B to finish construction on the 2.4M SF Oceanwide Plaza development after spending $1.1B on the project.

According to the default notice filed with the county, Oceanwide failed to complete construction as specified in the loan agreement with the EB-5 lenders; failed to obtain a senior construction loan for the project; had allowed mechanic’s liens to be filed against the project; and failed to keep all risk insurance on the development.

The default notice said a foreclosure sale of Oceanwide Plaza could take place in August, but at the end of August California’s state court of appeals temporarily blocked the sale in order to determine which of the lien holders get paid first.

Lendlease, Oceanwide’s general contractor on the project, and subcontractor Webcore filed suit claiming priority in the lien payout from a sale.

In 2021, creditors took over Oceanwide Center, a development in San Francisco which planned to include a 910-foot-tall office and residential tower as well as a 600-foot-tall hotel. The project backed loans worth about $322M.