Grocon downfall intensifies as more companies put into voluntary administration

The implosion of construction giant Grocon has dramatically intensified, with another 45 companies placed into voluntary administration.

The implosion of Grocon has dramatically intensified with the construction giant placing another 45 companies into voluntary administration.

Administrator KordaMentha on Monday said it had been appointed to a further 45 Grocon companies, in addition to the existing 42 companies that were already in administration.

KordaMentha said the latest appointments include Grocon Group Holdings, which is one of three Grocon companies suing the NSW government amid a dispute about views from a property development at Barangaroo.

The latest Grocon companies to enter administration also includes Grocon Constructors (NSW) while many of the other 43 specific purpose companies appear to be dormant, KordaMentha said.

The construction giant already had an existing 42 companies in voluntary administration.

“We are advised that no further entities are expected to enter administration and that a Deed of Company Arrangement will be proposed to include all 87 Grocon companies,” KordaMentha partner Andrew Knight said.

Mr Knight said KordaMentha aimed to hold a second meeting of creditors covering all 87 companies by the end of March.

Creditors at that meeting will vote on whether to accept an offer put forward by Grocon owner Daniel Grollo via a Deed of Company Arrangement or move to liquidate the companies in a bid to recover their funds.

Mr Grollo first called in administrators in November, placing 39 companies into voluntary administration with debts of around $60m.

The administration process was quietly widened on New Year’s Eve when three more corporate entities entered administration, including the $111m Northumberland Street development in Melbourne.

It has now widened again, further complicating the administration process for KordaMentha which is picking through the financial details of dozens of companies with millions in intercompany lending.

Daniel Grollo from Grocon at the company's headquarters in Melbourne.

Mr Grollo, who took full control over Grocon in 2012, oversees a sprawling corporate structure of more than 110 companies.

The third-generation Grocon heir has blamed his empire’s downfall on its legal stoush with the New South Wales government over its Central Barangaroo project in Sydney.

Grocon is suing the NSW government for $270 million, saying authorities did not tell it that Crown Resorts’ project would block the views of its development.

Mr Grollo is understood to want creditors to back a deal which links any payment to Grocon winning that court case.

It is not clear creditors will go for such a deal and at least one major creditor is pushing for more detail around intercompany lending, having said liquidation needs to be seriously considered by creditors.

Mr Grollo has said he aims to ultimately steer a smaller Grocon away from simply providing construction services and deeper into the build-to-rent sector where it builds and owns developments, renting the apartments out.