Liverpool City Council is taking legal action against a developer due to a stalled £200 million scheme in the city.

The New Chinatown development, which plans to create a new urban quarter featuring nearly 800 new homes, a 140-bed hotel and new commercial/retail floor space, has been affected by delays and disputes.

The city council has now instructed it's solicitors to start legal proceedings to forfeit two leases on the city centre site.

In addition, a statutory demand has been issued for the outstanding sum of £950,000 owed to the council by the developers, Chinatown Development Company Ltd.

The council said: "If Chinatown Development Company Ltd do not make the payment by Thursday, August 10 the council will apply to court to 'wind up' the company and if the petition is successful, the court will put an official receiver in charge of the liquidation.

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"In this event, the Council would seek repayment and look to work with the liquidator to find a solution to the stalled site as the city council also owns the freehold and is the landlord of the leases."

Cllr Ann O'Byrne said despite the local authority working with the developer in the proposed transfer of the site to a new buyer, "insufficient progress has been made".

"There are a number of challenges which could affect the transfer to any new buyer and in light of new legal advice and financial information, the approach to market the site has become unviable," she said.

"We have sought reassurances from Chinatown Development Company Ltd but regrettably an agreement could not be reached and the council has been left with no choice but to take this new course of action.

"The council remain committed to the redevelopment of the site and if a liquidator is appointed, we will seek a quick resolution to get the scheme back on track. Although the council has no contractual obligations to any investor, we fully appreciate their concerns and the council will look to work with the liquidator in a proactive way to find a solution to the stalled site."

In a statement, the directors of Chinatown Development Company said: "Unfortunately the relationship between CDC and Liverpool City Council has broken down.

"LCC have issued proceedings against the company. These proceedings will be vigorously defended.

"The company has previously worked in conjunction with LCC to deliver a sale of the site to Your Housing Group, which LCC are well aware failed to come to fruition after five months of negotiation."

(LM/MH)