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Courtroom moves in China to wind-up owners of Nestlé Tower

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CROYDON IN CRISIS: More problems for stalled £500m development of town centre landmark

Stuck in time: there’s been no work carried out on the Nestle Tower since early 2020

Guangzhou R&F Properties Co Ltd, the Chinese development company which owns the Nestlé Tower, the adjacent St George’s Walk and other buildings in the town centre, is in discussions with creditors over a winding-up petition, according to Chinese media reports over the weekend.

The collapse of what was once among China’s biggest development companies looks likely to spell the end for any prospect of the £500million Nestlé Tower project ever being completed, in another massive set-back for hopes to regenerate Croydon town centre.

The Croydon landmark building – as seen on national television every evening as part of ITV’s idents – has been empty since Nestlé quit Croydon in 2012.

R&F, based near Hong Kong, acquired its Croydon properties – which includes the neighbouring Grade II-listed Segas House – in a £60million deal in March 2017.

R&F’s plans, all approved by officials in Croydon Council’s planning department, proposed three tower blocks across the site, including the repurposing of the 22-storey Nestlé office block into 288 private flats. Work on the Queen’s Square project got underway in 2019.

But the development came to an abrupt halt in 2020 as the Chinese property sector collapsed under the pressures of the covid pandemic. The scaffolding around the block has remained in place ever since.

Extradition: R&F CEO Zhang Li

There had been conflicting reports in the past year emanating from Hong Kong and the office of Croydon Mayor Jason Perry of talks over the resumption of work on the Croydon development. The issuing of a warrant for the arrest in the United States of R&F’s billionaire founder, Zhang Li, only further complicated the situation.

In June this year, Zhang agreed to be extradited to the US to face bribery charges.

But a report in the South China Morning Post says that two of R&F’s creditors are taking legal steps to wind-up the business in order to recover the millions that they are owed. Sources at R&F were quoted as saying that they would “resolutely oppose the application”.

According to the Hong Kong paper, R&F has debts of £32.24billion, although their assets – mostly property and development sites, including Croydon – exceeds that amount.

The SCMP reported, “The developer has not yet received any court documents about the winding-up petition and will keep its shareholders and investors informed of any significant developments, it says.”

In a formal report to the Hong Kong Stock Exchange on Thursday, R&F said that it was in discussions with two creditors – Guangdong Xiangzheng Trade and Commerce and Guangzhou Guangfeng Concrete – that have sought to wind up the developer over debts of £2.14million.

R&F denied being insolvent.

The company “is actively discussing with the applicants and is confident that the matter will be resolved”, R&F said in its filing.

“R&F is among mainland Chinese developers that have had to contend with a credit squeeze following the introduction of Beijing’s ‘three red lines’ policy, which was issued in 2020 to rein in risky borrowings and unfettered expansion,” the newspaper reported.

“With credit lines restricted, many developers have been unable to meet their debt obligations, resulting in defaults.”

Inside Croydon approached Croydon Mayor Jason Perry for a comment on the situation with R&F and the Nestle Tower, but had received no response by the time of publication.


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