Now that a federal bankruptcy judge approved an intramural battle between lenders on Oceanwide Plaza, creditors are facing a decision: Make their own or joint credit bids and try to finish the project or sell it off in hopes of recouping sunk costs, a person with knowledge of the matter told The Real Deal.
The decision is imminent, the source said.
The project is estimated to require another $1 billion or more to complete.
The bankruptcy exit agreement recently reached over downtown Los Angeles’ problem project clears the way for a potential deal. The latest framework appears to offer the two major creditors an avenue to either bid the debt they’re owed in exchange for the property or sell for cash.
Bloomberg previously reported a potential investor is negotiating to buy the property, and the deal hinged on resolving the bankruptcy.
Under the latest agreement, LA Downtown Investment, funded via EB-5 investors, is entitled to a $230-million claim, and Lendlease, the one-time general contractor on the project, is in line for another of about $169 million. Other creditors, including one tied to Lendlease, are also in line for claims, per recent filings.
The mixed-use, two-million square foot development that sits opposite Crypto.com Arena near the LA Live entertainment hub, has been stalled for years since developer China Oceanwide ran out of money after putting more than a billion dollars into vision of a mixed-use megaproject with office, retail, hotel and residential components. The Beijing-based developer, which has since been delisted from the Hong Kong Stock Exchange, filed for Chapter 11 bankruptcy in 2024. Earlier, when the development stalled, China Oceanwide said it would need another $1 billion to complete construction.
Now the bankrupt developer is looking to sell the bedraggled asset off by making a presumptuous pitch about the priorities of the City of Los Angeles and its residents.
““A prompt sale and eventual completion of the project is a major priority for the city and the public at large, particularly with the upcoming 2028 Olympic Games in Los Angeles,” lawyers for Oceanwide Plaza said a court filing last month, calling it a “high-profile civic issue” for the city.
The settlement reached among creditors basically put an end to the millions of dollars being spent on lawyers while lenders sued each other. It outlined who got what and at what interest rate.
“The settlement agreement puts an immediate stop to this value-destructive litigation, preserving estate assets and allowing the debtor to pivot from endless legal battles to the productive work of selling the project and confirming a plan,” lawyers wrote.
Representatives for LADI, Lendlease and Oceanwide did not immediately respond to a request for comment
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