Grollo sweetens rescue deal by $3.2m to save Grocon from liquidation
Daniel Grollo has found another $3m to tip into the rescue plan for his Grocon empire in hopes creditors will accept the deal.
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Daniel Grollo has sweetened the deal in a bid to rescue his family’s construction empire from a liquidation and carve-up, chipping in another $3.2m.
The extra funds add to the $10m Mr Grollo already offered to tip in to pay upfront a bevy of Grocon creditors who are owed money by the construction business.
Mr Grollo had proposed a deed of company arrangement that would see some creditors paid upfront from a pool of assets and money contributed by the construction company, but any full payment is dependent on a win in the courts.
Grocon is headed to court to do battle with the NSW government over a decision it claims cost it $270m.
The construction company alleges a secret deal between the Barangaroo Delivery Authority and Lendlease and Crown Resorts blocked sightlines on Grocon’s flagship Harbour development,
The terms of the new and improved deed of company arrangement were spelled out in the latest supplementary report to creditors.
KordaMentha administrators welcomed the new deal proposed by Mr Grollo, but noted they were “somewhat disappointed that whilst being previously advised that the DOCA proposal dated 22 March 2021 was the final proposal, it was clearly not”.
The two adjournments that followed the first proposed rescue plan have alone cost another $300,000.
The administrators said they do not support proposals to liquidate Grocon.
“It is our view that the immediate winding up of the Companies would not commercially be in the best interest of the Companies creditors,” KordaMentha said.
The 822-page report released on Thursday comes ahead of a do-or-die vote by Grocon creditors on whether to accept the new deal or push for liquidation.
Creditors had been awaiting news of the company’s fate after a last-minute attempt by Mr Grollo’s lawyers to delay any vote on the fate of the company in March.
Small creditors will receive $1.4m out of the current cash in the deal, paying them in full.
The Australian Taxation Office will take $6m from the pot.
The ATO is owed in total almost $13.68m
While Grocon employees, except for Daniel Grollo, will receive $4.15m.
Returns to large creditors like APN, ISPT, and the Liberman family’s Impact Investment Group remain the same under the terms of the deal, receiving between 2.9c and 100c in the dollar.
The source of the upfront funds is proving a mystery as Mr Grollo has been hit hard by business troubles that have seen him made redundant from the construction empire started by his grandfather.
Some sources have suggested the almost $13.2m that will be tipped in by Mr Grollo has been loaned by groups friendly to Grocon.
At stake is Daniel Grollo’s luxury sub-penthouse in the Eureka Tower, which is owned by a corporate entity ensnared in the Grocon web.
However, the Eureka Tower rooftop will remain out of the administration.
Almost 88 Grocon entities are in administration, however Mr Grollo’s growing build-to-rent business remains under his control.
The business, which is building six projects across Sydney and Melbourne, has benefited from Grocon’s largesse, receiving millions in loans from the group over recent years.
Mr Grollo maintains the build-to-rent business is separate from Grocon, however it is based out of the same office space as the company and boasts a board composed of a bevy of company loyalists.
Documents show loans totalling $11.6m to GroconFunds Management, GFM Investment Services and GFM Delivery Services, companies which are all ultimately controlled by Mr Grollo.
Creditors have also been seeking to claw back funds used to buy and renovate the Grollo’s luxury New York City apartment.
Creditors reports reveal $13m in loans made out of the Grocon group that went to fund the apartment and purchase other lots in the building.
The $40m apartment is subject to a family court claim, and any potential return is set to be cut by a significant mortgage and almost $330,000 outstanding in unpaid property tax.
It’s understood attempts to gain part of the windfall sale will be complicated as Daniel Grollo does not hold a shareholding in the trust that owns it.
The report released on Thursday revealed further details of the complex financial web that has enmeshed the Grocon group and its creditors in a tangle of intercompany loans.
Mr Grollo had also pledged to pool intercompany loans in a bid to minimise any potential administrative nightmare caused by the huge number of intercompany loans in the Grocon group.
Mr Grollo has pledged to pour any potential winnings from Grocon’s legal battle with Infrastructure New South Wales into the pot.
Only once all creditors are paid under the scheme would Grocon receive any of the funds from a court win.
The fight is expected to hit the courts some time in early 2022, if Grocon and Infrastructure NSW don’t reach a mediation beforehand.
Originally published as Grollo sweetens rescue deal by $3.2m to save Grocon from liquidation
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