Grocon weighed down by hefty debts before construction arm collapse
The Grocon building empire was laced with complex inter-company debts before its collapse according to a statement of affairs filed with the corporate regulator by its director, property scion Daniel Grollo.
The company’s stretched state was laid bare by the filing at the end of last month, which indicated head company Grocon Pty Ltd owed hundreds of millions of dollars to its own subsidiaries, on top of millions to external creditors, including the Australian Taxation Office.
The document paints a grim picture of Grocon labouring to complete existing projects and drawing funds from its subsidiaries as it faced pressure to pay subcontractors and other suppliers while fending off legal actions.
The accounts were filed with voluntary administrator KordaMentha, which was called in last month and is due to hold the first creditors meeting on Wednesday for 39 entities which Grocon has said were mainly dormant.
The documents show inter-company debts could dwarf the estimated $60m the Grocon entities owe to external creditors.
Unless these debts are extinguished other creditors could be left with just cents in the dollar.
However, Mr Grollo has said he wants to pay back debts once his $270m legal case over a soured development deal at Sydney’s Central Barangaroo precinct is resolved.
There are few assets owned by the head company, with an ANZ bank account containing $614,814 the most prominent aside from investments in subsidiary units.
Grocon’s priority creditors list show the company owes hefty sums to staff for items like holiday pay, with one claim for $868,164. Amounts owed to creditors show more serious issues, with insurer Assetinsure owed about $2.46m.
The company also owes the ATO PAYE tax of about $1.8m and GST of $14.17m.
But the company owes much more to internal creditors, including $33.97m to the unit that completed the loss-making Commonwealth Games village projects. It owes the Grocon Constructors arm a massive $67.43m and close to $5m to a company that undertook a project in inner city Carlton.
This pales against the $39.17m it owes to the Grocon Constructors Victoria arm.
The largest outstanding sum is $102.71m owed to a Grocon entity associated with The Ribbon project in Sydney’s Darling Harbour. Although the company says it has ring-fenced this development from the administration, Chinese-backed developer Greaton could put a new builder in shortly, sources said.
Funds are also owed back to the head company from a series of developments with the largest amount of just over $243m from a Victorian building entity. Many of these loans have an “unknown” realisable value. Mr Grollo himself is listed with a loan receivable of $11.49m owed to the company.
This article originally appeared on www.theaustralian.com.au/property
