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Spring Street hotel project heads to bankruptcy court

Lizard Capital's Jack Deng and a rendering of the Spring Street Hotel (Lizard Capital, Adam Sokol Architecture Practice)
Lizard Capital’s Jack Deng and a rendering of the Spring Street Hotel (Lizard Capital, Adam Sokol Architecture Practice)

Beijing-based developer Lizard Capital has filed for bankruptcy on the Spring Street Hotel, a planned 170-key hospitality project in Downtown Los Angeles, just a day before a public auction scheduled by lender Westridge Lending Fund.

Lizard in Los Angeles, the LLC that owns the property, filed for Chapter 11 bankruptcy protection from creditors in California federal court on July 26, court records show. It estimated the value of its assets between $10 million and $50 million. The bankruptcy fends off a foreclosure attempt from Westridge, which scheduled a public auction of the property on July 27.

The LLC, which names Jack Deng as the sole member, listed seven creditors.They include architecture firm Adam Sokol, accounting firm Baker Tilly and Los Angeles County’s tax collection agency. Westridge was not included on the list.

Westridge filed two notices of default on the property in March, property records show. The latest filing, which was registered March 17, cited a debt of $6.6 million. A week later, Westridge filed documents that rescinded the notice of default. The lender put out a notice announcing the public auction.

The hotel, located at 633 South Spring Street, was scheduled to open this year. At its website, Lizard described the project as its “first flagship location.” Plans for the site included a 7,000-square-foot restaurant, a gallery and “one of the highest roof bars in Los Angeles.”

The project was previously stalled by opposition from hotel worker labor group Unite Here Local 11. In 2018, the union questioned the city’s approval of the project. The group claimed that city officials failed to take into consideration the project’s impact on local historic resources. Lizard and the labor group reached a settlement in January 2019.

The bankruptcy expands the list of Chinese firms that have fallen behind on debt payments. According to data from Dealogic, Chinese real estate companies are facing $13 billion in foreign currency bond payments through the rest of the year.

Adam Stein-Sapir, the head of Pioneer Funding Group, an investment firm that buys bankruptcy claims, expects more stress in the hotel market, particularly in relation to foreign buyers.

“Normally, hotels have a lot of debt against them,” he said. “The chances of bankruptcy are certainly heightened.”

A hearing on the Lizard in Los Angeles bankruptcy is scheduled for Aug. 29. David Golubchik, the attorney for Lizard Capital, did not respond to a request for comment.

The post Spring Street hotel project heads to bankruptcy court appeared first on The Real Deal Los Angeles.

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  • 29 July 2022
  • The Real Deal
  • Uncategorized
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