The development company behind the controversial New Chinatown project has collapsed into administration.
The Great George Street Project Limited ( GGSPL) entered into administration following a High Court hearing last week.
The application, brought by Maghull businessman and creditor Francis Molloy, is the latest twist in a long running saga that has attracted huge controversy since it was first launched seven years ago.
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The first scheme, promoted by Liverpool businessman Peter McInnes, received a blaze of publicity in 2015.
The £200m project by the Chinatown Development Company ( CDC) envisaged new shops, homes and offices off Great George Street and was expected to revive the city's historic Chinatown community.
However, the scheme began to stall the following year after the ECHO reported on a complicated hearing at Preston Crown Court.
Parent company North Point Global then entered into a legal dispute with Liverpool City Council and work at the site ground to a halt.
Investors, who claimed to have put in around £6m, formed a buyers company and demanded their money back.
New company GGSD announced in March 2017 that it had bought CDC and hoped to start work on phase one of the scheme during the summer of 2019.
Some observers were surprised that GGSD chose to take over CDC rather than just buy the land off Great George Street.
In January 2019 the Serious Fraud Office ( SFO) launched an investigation into suspected fraud at the CDC and sister company North Point (Pall Mall) Ltd.
The ECHO understands the investigation pre-dated GGSD's involvement in the scheme.
Last October the SFO announced they had discontinued their investigation into suspected fraud at the Chinatown Development Company and North Point Pall Mall because they did not have enough evidence to prosecute.
The SFO said that they would, however, ' continue to assist other partner agencies with ongoing investigations.'
In February 2020 investors and campaigner Josie Mullen expressed concern when Great George Street announced plans to create an urban farm at the stalled site.
Richard Kemp, leader of the city's Liberal Democrats, expressed concern around loan notes, a type of financial bond, sold by the company through agents to investors.
At the time a public relations officer then representing the company assured the ECHO that concern around the loan notes was misplaced. The same officer said that a large financial organisation had agreed to fund the £200m scheme.
The press officer also threatened the ECHO with legal action.
Now parent company Great George Street Project Limited , the successor to CDC, is to be run by administrators Cowgills.
Administrators normally try and calculate if a business can either be saved or should be wound up by a liquidator.
The latest filed accounts for the company from December 2019 show the company had assets of £6,656,600 and liabilities of £9,430,199, with a net deficit of £2,773,599.
Daniel Moretti , speaking on behalf of the developers, said: "The administration process is welcomed by me as a remaining director of Great George Street Developments and Great George Street Projects.
"I am pleased that this will now provide an exit for secured investors such as New China Town investors who have been waiting a long time for a settlement.
"I would also state that whilst accepting that the administration is absolutely the correct thing to do, the manner in which it was done is being carefully reviewed by our lawyers."
Investors in the scheme , who claim they are owed around £6m, welcomed the appointment of administrators.
A spokesman said: "New China Town Buyers Ltd represents 58 buyers in China Town Liverpool and their investment is secured by a charge it holds on one of the leases on the site.
"Due to an administration order the main buyers group will now hopefully get refunds through the sale of the leases on the site.
"The buyers have waited years in hope of a refund out of a scheme that never should have been given to the developer.
It has been a long and damaging six years for investors who just believed in a project created by a developer and backed by many credible institutions.
"After being misled by glossy brochures, smart salesmen, internet visions and the backing of the UK Government and Liverpool City Council the 58 investors backed the development. They never believed the nightmare they would then suffer.
"I think there are serious questions for a number of individuals at the council in relation to this scheme. The buyers company spent three years asking the council to intervene but nothing happened.
"The developer has repeatedly tried to get the buyers to accept less than their deposits, but now due to their determination they will, through the administration, hopefully get their money back.
"The owners of the development company treated investors very badly. We are therefore delighted the end is close. We hope Liverpool City Council and the administrators ensure a decent and financially viable company take over the leases.
"We are grateful to Jimmy Fish and his colleague at Cowgills and Mark Hague from Farleys Solicitors for acting as quickly as they did on behalf of Mr Molloy and for assuring us they will act with due diligence at all times.
"The investors are just ordinary people who wanted to protect their family's future. We believe this shows that investors can act against developers. We look forward to a new lease of life for the oldest China Town in Europe and that the community will be involved in the new project."
Richard Kemp, leader of the city's Liberal Democrats, said:"The news that this company has followed other would-be developers on the China Town site into administration comes as no surprise. I warned two years ago that this appeared to be a straw company. Rotating directors and late filings of accounts and a head office above a shop in South London should have warned off would-be investors. The idea that any company could offer to effectively borrow money with a payback after two years of 12% per year when the Bank Rate was 0.25% was a highly unlikely proposition.
"However, when you looked at the brochure issued by the company it became clear that they were borrowing money for any property venture although the only opportunity featured in it was the China Town Development.
"This was hidden away in very small print as was another assertion that the directors of the company could not be questioned on investment policy.
"Last month the council agreed to a motion from me asking for action on this site and are preparing option appraisals of what can be done with it . This news should give the Council added impetus in seeking ways to take control over the whole of this prominent site which has been a nuisance and an eyesore for too long.
"The cabinet of the council also agreed to my request to write to the Government asking for all property-based investments to be brought under the control of the Financial Conduct Authority. I can only regret that some people have been taken in by this company using the City of Liverpool as a background for their work."
Former councillor Josie Mullen who has long campaigned to highlight the issues around the city's stalled sites said: "After the collapse of the first attempt to build the Chinatown development by North Point Global and the subsequent massive losses to investors, the warning signs were there.
"So along came Great George Street Developments who claimed they were 'engaging with major institutional investors' to fund the scheme.
"It became increasingly clear that there weren’t any. The company then started to flog financial bonds in the scheme.
"In June 2021 the site was still a dump, no community events space had ever been developed and nobody in the council seemed bothered.
"It now became apparent that Great George St Developments would never build the Chinatown development and small investors would probably lose their money again.
"We now discover that Great George St Developments have, in fact, gone under and the Chinatown development with it.
"What I would like to know is why has nothing changed in Liverpool."
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