NSW agrees to a confidential settlement with Grocon over failed Central Barangaroo project
Grocon has secured a confidential settlement from Infrastructure NSW over its $270m Central Barangaroo claim, as a court fight between the two was fast approaching.
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The court fight between the NSW state government and former property developer Grocon is drawing to a conclusion, but any payout to creditors appears to be some way off.
Sources have told The Australian Grocon’s $270m claim against Infrastructure NSW will be finalised in a confidential court settlement which is expected to fall well short of the original figure sought.
The deal comes after several weeks of back and forth between Grocon’s lawyers, creditors, and iNSW and its lawyers – as a court fight between the two sides in 2024 approached.
NSW Supreme Court judge Andrew Bell moved to pull the trial on December 1 after iNSW indicated it was close to reaching a settlement with Grocon.
The payout, set to be formalised after the matter is concluded in the NSW Supreme Court, sets the stage for the final payout of Grocon’s creditors under a deed of company arrangement signed in May 2021.
The DOCA, reached by King and Wood Mallesons, resulted in Grocon boss Daniel Grollo proposing to put millions of dollars of his own funds in to supplement a return to creditors and former Grocon employees.
Creditors claim they were owed at least $104m.
The deal proposed by Mr Grollo involved Grocon paying out a number of employee entitlements and small creditors with claims below $10,000.
The Australian Taxation Office was handed an upfront $6m payment to cover an overall $13.7m tax bill Grocon had accumulated.
Mr Grollo also put up $13.32m in cash for the deal, after creditors rejected an original $10m personal cash contribution made by the Grocon scion.
However, large creditors and bond providers were offered just 2.5c to 2.9c in the dollar on claims made against Grocon, and they were offered a share of any future return from the construction company’s litigation against the NSW government, as well as the sale of assets.
Administrator KordaMentha has since sold a number of Mr Grollo’s and Grocon assets, including a penthouse apartment in Melbourne’s Eureka Tower
Large creditors reported almost $31m in claims against Grocon, while bond providers reported $17.1m in funds they claimed from the administration of the construction group.
Details of the payout from iNSW will be revealed in time as funds flow to creditors, but sources close to both sides were silent about the size of the payout.
Mr Grollo is understood to be missing out on any potential payout from the settlement with iNSW.
However, almost $133m in Grocon intercompany loans were not required to be repaid or unwound under the terms of the DOCA.
This included almost $11.6m advanced to Grocon Funds Management, GFM Investment Services and GFM Delivery Services – companies which sat outside the administration process and which were linked to or controlled by Mr Grollo.
Grocon had sought $270m the NSW government in its court claims over Central Barangaroo, arguing the developer had sold its interests in the massive project considerably below its true value. Grocon had sold its stake to Aqualand for $73m, only for the Chinese-Australian developer to be handed rulings by the state government which clarified the scope of what could be built at the site.
Grocon had for years attempted to secure the sight lines ruling from the state government to begin work on the Central Barangaroo project but was stymied by disputes lobbed by Crown and Lendlease in an attempt to protect uninterrupted views of the Sydney Harbour Bridge and Opera House.
A NSW parliamentary inquiry found Grocon was treated unfairly, and that iNSW failed to be transparent and forthcoming, and failed to anticipate the consequences of several decisions made with Central Barangaroo.
Meanwhile, KordaMentha faces more legal action surrounding Grocon.
The collapsed Melbourne developer is locked into the Hastie Group Class Action fight, a web of litigation surrounding the formerly ASX-listed building services company which was placed into liquidation in 2013.
Lawyers have previously claimed Grocon owes as much as $7.9m in unpaid invoices and an additional $3.7m in bank guarantees to the Hastie Group.
CASL, which funded Grocon’s case against iNSW to the tune of $7m, is also expected to reap a return from the settlement.
Once a construction empire of more than 88 separate operating entities, Grocon was first tipped into administration in November 2020 during disputes and delays to a number of high-profile projects.
Mr Grollo progressively dismantled the remaining company and placed the business into administration in four separate tranches through to February 2021.
An iNSW spokeswoman said the agency’s mediation with Grocon was “ongoing and confidential”.
“Infrastructure NSW has commenced court-ordered mediation with Grocon, as part of the legal dispute over the Central Barangaroo development,” she said.
Originally published as NSW agrees to a confidential settlement with Grocon over failed Central Barangaroo project
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