After nearly a decade of litigation, stalled construction and repeated failed bids to sell downtown L.A.’s most notorious unfinished development, the Oceanwide Plaza has reached a pivotal bankruptcy exit agreement with its creditors.

The $1.2 billion, three-tower mixed use complex – originally developed by the Beijing-based developer China Oceanwide Holdings Group – has been mired in Chapter 11 proceedings since 2024. The settlement, approved in late January by the U.S. Bankruptcy Court, could finally unlock a long-elusive sale and reposition the project for redevelopment in a market already hungry for housing and mixed-used space.

“This settlement agreement puts an immediate stop to this value-destructive litigation,” attorneys for Oceanwide Plaza said in the Jan. 28 court filing.

Towering over Crypto.com Arena, the 2-million-square-foot complex was once envisioned as a transformative residential, hotel and retail destination. China Oceanwide kicked off construction in 2015, but the work ground to a halt in 2019 when the company ran out of funds after the Chinese government tightened restrictions on overseas capital investments.

Since then, the trio of high-rises became a target of graffiti artists and taggers, who turned the unfinished shells with no facade and windows into an unlikely urban art canvas – earning the complex its nickname “Graffiti Towers.”

For downtown stakeholders, the towers served as a visual reminder of downtown’s broader struggles since the Covid-19 pandemic including office vacancies, slower tourism and
stalled investment.

Biggest obstacles

The project – on which developers still owe years of unpaid property taxes – has been losing value over the years. And behind the scenes, the project’s biggest obstacles were legal and financial. Multiple factions including the creditors LA Downtown Investment, contractors Lendlease Construction Holdings and subcontractors Webcor Construction pursued interwoven disputes over lien priority, the unpaid taxes and work and who should control the property futures – all of which delayed any resolution.

The breakthrough agreement – representing the most meaningful progress yet as the site looms unfinished – will settle those claims. As part of the terms, LA Downtown Investment will be entitled to roughly $230 million, and the other creditors hold claims that could total into the hundreds of millions.

The breakthrough agreement is “preserving estate assets and allowing the debtor to pivot from endless legal battle to the productive work of selling the project and confirming a plan,” Oceanwide Plaza lawyers said in the court filing.

In the end, the settlement establishes a framework to sell
the property.

Bloomberg News reported that a potential investor is in the process of negotiating to purchase the towers and closing that deal depended on resolving the bankruptcy.

“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 and Paralympic Games) in Los Angeles,” lawyers said in the filing. “The city fully supports the approval of the settlement agreement.”