APN Property says its been ‘hung out to dry’ in new Grollo offer

Daniel Grollo’s latest offer has been accused of hanging major creditors “out to dry”, with APN slamming the sweetened deal.

The Melbourne property fund that has pushed hardest for a better deal for Grocon creditors says the Australian Taxation Office will be hanging other large creditors “out to dry” if it accepts a revised settlement from Daniel Grollo.

In its first comments since the release of a sweetened offer from Grocon boss Daniel Grollo, property fund APN Property Group said the new deal appeared designed to divide major creditors in order to secure a successful vote.

“They (the ATO) have used the adjournment period, supported by other creditors at the previous meeting, to feather their own nest and leave the other creditors to hang out to dry,” APN representative Anthony Simpson said.

Grocon chief Daniel Grollo. Picture: Stuart McEvoy

“It was APN’s insistence on a better deal that has seen the ATO receive an additional $4.5m in returns.”

Mr Grollo released a new offer to Grocon creditors, who are owed around $100m, on Thursday in which he will tip in an extra $3.3m cash payment.

Virtually all of that will flow to the ATO in a move other creditors believe is designed to secure its powerful vote at an upcoming creditor meeting.

A majority of creditors representing a majority of funds owed must approve the new deal or, alternatively, they can vote for liquidation of the legacy Grocon construction business.

A New York apartment owned by a corporate entity linked to Daniel Grollo.

Liquidation would pave the way for creditors to claim assets held outside the Grocon administration process, including a $40 million New York apartment owned by a company linked to Mr Grollo.

Under the revised offer, the ATO will pocket at least 43.9c in the dollar — up from an original return of 20.5c.

Its return also includes a $1m “standstill fee” under which it will drop any claims to Mr Grollo’s businesses which continue to trade.

The ATO is owed about $14m.

But other large creditors – those owed more than $10,000 – including APN have not had their returns increased and face getting back as little as 2.9c on the dollar.

Grocon chief Daniel Grollo arriving at law firm King Wood Malleson's in April.

The ATO declined to comment on how it would vote at the upcoming Grocon meeting, saying it did not comment on the tax affairs of individual entities.

“The ATO is a significant participant in the insolvency sector, including as a creditor, and we recognise the important role we play in supporting the integrity and public confidence in the insolvency process,” it said in a statement.

“We also recognise the community expectation that companies trading in Australia should pay their taxation liabilities in full.

Grocon creditors are set to vote on the new offer on Thursday.