Daniel Grollo puts forward plan to pay out Grocon creditors
Daniel Grollo has handed the administrators of the collapsed Grocon empire a plan to pay out creditors, with its prospects to be decided this month.
The embattled property tycoon is seeking backing for a deed of company arrangement to avoid the company going into liquidation, which could leave creditors further out of pocket and him facing further investigations into the collapse.
Grocon’s slide began after it called in administrators KordaMentha to 39 defunct entities last November, but the collapse has since embroiled the entire company and it has handed over building jobs in Melbourne’s Collingwood and at Darling Harbour in Sydney to other companies.
Mr Grollo is yet to reveal how much creditors will receive but returns are likely to hinge on winning a $270 million legal action that Grocon launched against the NSW government over its actions at the harbourside Barangaroo precinct in Sydney, which Grocon claims hurt the company.
The plan will be assessed by KordaMentha, which will report to creditors of all the Grocon entities now in administration and recommend whether they will back it or should vote to liquidate the famous company.
At a closed meeting on Thursday the administrators flagged that they would assess the merits of the plan for different classes of creditors.
The administration has cut deeply for Mr Grollo, having grown Grocon from a series of inactive companies to 87 entities, including some that were still undertaking building work.
Mr Grollo, who was Grocon chief executive, was last month made redundant alongside all executives at the once iconic builder and developer.
His departure all but severed the family’s legacy with the builder that was started by his grandfather Luigi Grollo, and the latest administrations also mean his luxury sub-penthouse in the city’s Eureka Tower will come up for sale.
Mr Grollo is still blaming Infrastructure NSW’s actions at Barangaroo for Grocon’s problems but the state development body is defending the legal action.
Grocon is arguing that a secret deal with the Barangaroo Delivery Authority, Crown Resorts and rival developer Lendlease capped its potential tower height and it was forced to sell out to partner Aqualand.
Mr Grollo said last month the move to put more businesses into administration was necessary in its preparation for the court showdown with the NSW government.
“Sadly, there is a human toll to this action with 20 staff no longer employed. I didn’t want it to come to this, but I have had to accept the fact that NSW would rather put Grocon out of business than take responsibility for its actions,” Mr Grollo said.
“We need to focus on winning the court proceedings so we can compensate the group and its creditors. But to achieve this, we have to close down most parts of the legacy Grocon construction business to avoid financial resources being allocated away from this fight.”
A recent report to creditors found Mr Grollo owed Grocon almost $11 million in loans taken from the group. His level-80 luxury sub-penthouse in the Eureka tower is now in the mix after Grocon’s subsidiary and owner of the property, the Grocon ET 80 corporate entity, went into administration.
This article was first published on www.theaustralian.com.au/business/property.