Downtown Los Angeles’ infamous eyesore is one step closer to being cleaned out.
The skyscraper known as the Graffiti Towers — officially the Oceanwide Plaza development — has reached a bankruptcy exit agreement that paves the way for a potential sale, court records show.
A federal bankruptcy judge on Tuesday signed an order approving the agreement, which was filed on Jan. 28 and resolves various disputes between creditors.
Lawyers for Oceanwide argued in the Jan. 28 court filing that the agreement would put an end to “value-destructive litigation” and allow Oceanwide to focus on selling the project and confirming a plan.
“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,” Oceanwide’s lawyers wrote.
The settlement is a “critical step” toward selling the property, which will allow for the “permanent removal” of graffiti and “permanent elimination of safety concerns at the Property,” they continued.
The real estate broker managing the sale, Mark Tarczynski of Colliers, declined to comment.
A potential investor is in talks to acquire the property, but the deal depends on the bankruptcy being resolved, as reported by Bloomberg, citing unnamed sources.
The settlement agreement resolves various legal battles between creditors over the order that they get repaid in, sets the amounts of the claims and provides a “framework for a consensual chapter 11 plan and sale, and a distribution waterfall for the proceeds from a sale.”
Under the agreement, L.A. Downtown Investment LP will receive a $230-million claim, while the “mechanics” liens — which are typically associated with unpaid construction work and are held by Lendlease (US) Construction Inc. and DTLA Funding LLC — total $168 million.
The agreement also includes a $20-million payment from Lendlease (US) Construction Inc. to Chicago Title Insurance Co. to resolve disputes between the two companies.
Oceanwide Plaza, located across Figueroa Street from Crypto.com Arena and on the site of a former event parking lot, was once envisioned as a crown jewel of downtown Los Angeles.
The Chinese-backed, mixed-use development project would have included more than 500 condos and 180 hotel rooms across three towers. It would have also included nearly 170,000 square feet of shops and restaurants.
“The draw power of this location is tremendous. We’re in the heart of the entertainment and sports district,” Thomas Feng, then-chief executive of Oceanwide’s American subsidiary, told The Times in 2016.
The $1-billion development started in 2015 and was originally slated to be completed in 2019. But construction stalled in January 2019 as the owner — the publicly traded, Beijing-based conglomerate Oceanwide Holdings — ran out of money to pay contractors.
As the luxury building sat vacant, taggers armed with spray paint flocked there, hoping to leave a colorful mark on the city skyline. Some even filmed themselves walking on ledges of the unfinished skyscrapers.
In 2024, the Los Angeles City Council allocated $3.8 million to clean up and secure the building. About $2.7 million was allocated for security services, fire safety upgrades and graffiti abatement. Another $1.1 million was set aside to build fences and secure the ground floors of the building.
Oceanwide Holdings also planned to build two skyscrapers in San Francisco’s Financial District, but construction halted in 2020 after the company ran out of money, the San Francisco Chronicle has reported.
China Oceanwide Holdings was delisted from the Hong Kong Stock Exchange last year.
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