Grocon’s fate delayed as creditor uproar forces adjournment

Failed construction company’s future remains unclear after big creditors fired up over a proposal from the founding Grollo family.

Daniel Grollo is trying to persuade creditors to back his restructuring plan for Grocon. Picture: Stuart McEvoy

The fate of Daniel Grollo‘s collapsed Grocon building empire remains in the balance with administrator KordaMentha sensationally switching tack and adjourning a meeting for 10 business days as plans to rapidly decide its future at a Tuesday meeting fell apart.

The move came after a fiery disputes in which a series of major creditors who are fighting legal battles against the builder, which fell over owing about $100m, spoke out against the apparent rush to vote on a deed of company arrangement proposed by the fallen tycoon.

The creditors, who include powerful funds managers the listed APN Property Group, the Liberman family-backed Impact Investment Group and industry superannuation fund vehicle ISPT, as well as the Chinese company behind Sydney’s Ribbon development in Sydney, Tianlong Ribbon, said they would back an adjournment.

APN pushed for a 45 day adjournment and has been critical of a report by KordaMentha for not providing enough information about Mr Grollo’s financial position.

The group’s representative, Anthony Simpson, clashed with KordaMentha partner Craig Shepard during the meeting about valuations of key assets and loans that had flowed out of the group to private Grollo-controlled companies.

In a dramatic shift during the meeting the Australian Taxation Office, which is owed about $14.5m across the Grocon empire, suggested a motion for a ten day adjournment.

Mr Shepard initially rejected the calls for adjournments warning they would add to administration costs and not produce any further information.

He said that Mr Grollo had provided statutory declarations about his financial position and given more information than legally required.

Mr Shepard broke the impasse after warning that the Grocon empire’s 88 companies could end up being split between those that took Mr Grollo’s deed and those who backed an extension.

To forestall this “disastrous” outcome he then moved to adjourn the meeting for 10 business days.

No backdown

The scion of the Grocon construction empire addressed the creditors meeting, lamenting the situation that had brought the business founded by his grandfather to administration and apologised that creditors had to “endure” the process.

But the one-time property magnate refused to back down in the face of a barrage of criticism of his deed of company arrangement and finances, noting the many phone calls he’d received “expressing empathy and backing me to continue” in recent weeks.

Mr Grollo laid the blame for the failure of the construction group firmly at the feet of Infrastructure NSW, with which he is locked in a critical struggle in the NSW Supreme Court over the company’s treatment at harbourside Barangaroo.

“You are all here today voting as part of an administration process directly caused by the unconscionable behaviour of infrastructure NSW,” he said.

“We have now secured litigation funding for us to continue our fight to the very end and I believe Infrastructure NSW will be held to account.”

APN questioned whether Mr Grollo would provide further information on the loans made to investment funds associated with him and his family.

But the administrator warned that attempts to garner further information would likely fall flat.

“They can tell me to bugger off and I don’t have the power to do anything about it,” Mr Shepard said.

Impact investment Group chief executive Paul Belcher called on Mr Grollo to respond to criticism that not enough information had been provided.

“I wonder whether in response to your question Daniel Grollo can address the meeting, if he’s comfortable providing the information to creditors, and if not why not what’s he trying to hide?,” he asked.

Mr Grollo declined to provide further information regarding the nature of loans or the assets that had come out of the group, telling creditors he had already provided more information “than we are legally required to”.

“We are keen that we are seen to be transparent,” Mr Grollo said.

Melbourne-based APN has led the charge against his deed and is pushing him to provide further details about loans that went from Grocon into his private holdings, including those relating to his ongoing build to rent business.

KordaMentha’s report also noted the complication of Mr Grollo’s former wife Kat, suing for some assets that he controls personally and others that were part of the company.

Mr Shepard said these claims had been rejected by the company but the administrator‘s report noted they could impact materially on Mr Grollo’s financial position.

The delay has pushed back a decision about whether the Grocon empire will face a liquidation back to April 16 but legal hostilities are still flaring.

During the meeting, Infrastructure NSW distributed a media release saying that it was defending Grocon‘s $270m legal claim against it.

APN representative Mr Simpson suggested to the meeting that lawyers ABL review the claim in order to give creditors a better idea of its chances of success.

Originally published as Grocon’s fate delayed as creditor uproar forces adjournment