Creditors target Daniel Grollo’s luxury apartment as Grocon’s woes grow

The second creditors meeting for Grocon revealed a mysterious $140m transaction, with the search on for any way to recover costs.

Daniel Grollo from Grocon. Picture: Stuart McEvoy for The Australian.

Daniel Grollo’s multimillion-dollar penthouse apartment in the Eureka tower in Melbourne may be on the auction block as the true extent of the property development mogul’s financial woes emerged in a creditor’s meeting on Tuesday.

The second meeting for Grocon creditors, covering three corporate entities Mr Grollo placed into administration with Korda Mentha on New Year’s Eve, revealed trade creditor’s claims in excess of $22m, on top of intercompany loans totalling $81m, according to several creditors who attended the meeting.

These debts come on top of those racked up by the 39 other Grocon corporate entities placed into administration in November.

The Australian Taxation Office is also going after Grocon for $14.3m in unpaid GST for a potential $140m transaction made on September 1 last year by a Grocon entity outside of administration.

APN Property Group, which is also in dispute with Grocon, also questioned administrators over how long the Grocon entities had been under financial pressure, according to those that attended the meeting.

Accountant for the APN Group Anthony Simpson asked Korda Mentha whether they would seek to make a claim on the luxury Eureka tower penthouse apartment owned by Mr Grollo.

Mr Simpson noted a similar apartment in the building had sold for $25m.

Korda Mentha administrator Craig Shepard noted while the company that owned the apartment was not in administration, businesses that controlled the shareholding of that company were and he would investigate selling it.

Creditors are circling Grocon as the report tabled on Tuesday revealed the entities now in administration have scant assets and bulging debts.

One company had only $4429.98 in accessible bank deposits, with the remaining $522,692 locked away in trusts set aside to cover costs arising from Grocon’s bushfire clean-ups.

In detailed notes of the meeting supplied to The Australian, Grocon CEO Daniel Grollo said he had reluctantly placed the latter three corporate entities into administration “reluctantly”after failing to reach an agreement to continue works on the troubled $116m Northumberland site in the Melbourne suburb of Collingwood.

According to those present Mr Grollo told the meeting that had the investor allowed Grocon to complete the project it would have been a much more “efficient and cost effective route” for the project.

“I’m keen to have you have your credit amounts returned in full over time,” Mr Grollo reportedly told the meeting.

However, the Impact Group, which owns the Northumberland Street site rejected Mr Grollo’s suggestion.

Impact Investment Group CEO Paul Belcher told the creditors meeting Grocon had suggested an agreement that would see the construction company and Impact pay $6m each to “bring creditors up to speed”.

Mr Belcher said the company had been in negotiation with Grocon to secure funding from a financier to complete the project, subject to a security package secured against some of the assets and properties held by Grocon.

“We were then advised by the (Grocon) CFO the package was with Daniel (Grollo) about what he wanted to do, then we were advised the financier had walked away,” Mr Belcher alleged.

“It was Daniel Grollo’s choice that would have enabled this project to be completed.”

Eureka Tower, in Melbourne, Victoria. Picture: NCA NewsWire / Daniel Pockett

Mr Belcher said Impact continued to negotiate with Grocon following this,

“We were told Grocon had no money at all to contribute to the completion of the project,” he alleged, according to several transcripts of the meeting seen by The Australian.

Mr Belcher noted several subcontractors on the site, who are owed between them $6-8m, had refused to work with Grocon if the construction company were retained at the Northumberland Street site.

He also noted that Impact had required Grocon to sign statutory declarations that subcontractors had been paid at the end of every month.

Mr Belcher also questioned Grocon’s relationship with auditors Deloitte.