This was published 3 years ago
Grocon calls in administrators as Barangaroo stoush takes toll
By Carolyn Cummins and Simon Johanson
Wealthy property developer Daniel Grollo has blamed the collapse of his famed Melbourne construction firm Grocon on the NSW government's infrastructure arm, blasting its handling of a legal dispute over the Barangaroo project in Sydney.
As foreshadowed by The Age and The Sydney Morning Herald this week, Grocon called in administrators on Friday after declaring its construction business insolvent. Mr Grollo said his group was now "fighting for survival" due to the "unconscionable conduct" of Infrastructure NSW.
Grocon chairman and chief executive Daniel Grollo said Infrastructure New South Wales' handling of the Barangaroo project in Sydney had forced the developer to call in the administrators.Credit: Wayne Taylor
"So we're going to keep fighting, which is not going to stop," Mr Grollo told The Age and The Sydney Morning Herald. "We try to do [business] in as constructive way as possible ... we want to keep working in NSW. We've got other projects and other plans we'd like to get onto.
"We're trying to continue to contribute to the community in NSW and in Sydney and this is one group standing in the way of their continued support of the community, one group causing a lot of stress and anxiety in the community. And they're just not showing any leadership whatsoever".
Infrastructure NSW rejected Mr Grollo's claims, saying the suggestion it contributed to or caused Grocon's financial troubles was examined in a judgment of the NSW Supreme Court in September 2020. "The judgment in favour of Infrastructure NSW found Grocon’s financial situation preceded their involvement in Central Barangaroo," an INSW spokesperson said.
Work has already stopped on a key Grocon site in Melbourne, with subcontractors downing tools after not being paid for many months.
Work on developer Grocon's only Melbourne project - the Northumberland development, a 12-level inner-city office in Collingwood - has ground to a halt and the company has called in administrators Credit: Simon Schluter
However, Grocon said that its Ribbon development in Sydney's Darling Harbour and the Northumberland development in Collingwood, Melbourne would not be included in the administration entities.
Sources suggested that the developer of the Ribbon project, Greaton, took back the development and construction rights this year.
Melbourne-based Grocon has close ties with the Victorian capital, having made its name with the construction of the Rialto tower and Crown casino on Southbank. It was founded 73 years ago by Luigi Grollo and after his death has been run for by his grandson Daniel Grollo.
Over the years the company has fought many battles with building unions, but in more recent times its been in court facing off against the NSW government.
The $270 million dispute centres on Grocon's claims that government agency Infrastructure NSW undercut its high-rise aspirations in Central Barangaroo, forcing it to sell its share in the project at a steep discount to Chinese player Aqualand.
Mr Grollo said in a statement it was unfortunate that INSW was forcing its hand to place the construction business into administration.
"While I have spoken before about moving Grocon away from the construction business model to new initiatives such as Build to Rent, I did not want to call in administrators," Mr Grollo said.
"My desire is to pay the creditors in full. I believe we will ultimately win the case against INSW and when we do, the creditors will be the first in line to be compensated."
Grocon's other recent legal challenges include disputes with with property heavyweights Dexus, APN Property Group and GPT.
Grocon launched fresh legal action against the NSW government in July, in an effort to compel the release of settlement documents in relation to the Central Barangaroo project. It has called the litigation a David and Goliath-style legal battle.
Grocon says it is now fighting for compensation in the NSW Supreme Court after two years of attempting to negotiate with INSW, the government agency handling the precinct since the closure of the Barangaroo Development Authority (BDA) in July 2019.
In September 2020 INSW won a court order compelling Grocon to pay $1 million of security for the agency's legal costs in order to proceed with its case, another move which Mr Grollo says is intended to put additional pressure on the company's financial position and force it to walk away from the litigation.
The court did not accept the argument it was a "David v Goliath" battle or that there was a public interest in the litigation.
In the documents, the court said it is a simple commercial dispute where one party happens to be owned by government. It also said Grocon is not a small company and characterises itself as a large development business.
"We are still standing, but we have been badly let down by INSW," Mr Grollo said.
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