Family feud: APN push to liquidate Grocon

Low-key Melbourne funds house APN Property will push for a Grocon liquidation in an effort to recoup money from a soured Melbourne development deal.

Grocon’s Daniel Grollo. Picture: Stuart McEvoy.

Low-key Melbourne funds house APN Property will push for a liquidation of the Grocon building empire in an effort to recoup money owed from a soured Melbourne office development deal.

APN, a successful listed property funds manager, has been locked in a lengthy legal battle with Grocon over works undertaken on an office building at 150 Collins Street.

The dispute has generated years of litigation up to the High Court after disagreements about the building job by Grocon when Daniel Grollo was at the helm.

The project would have seen the pair split the development profits but APN was hit by a series of cost claims that it has fought, and despite some legal wins, APN says that its unlisted development fund is still owed $14.5m.

Their dispute has an unusual twist: APN has a long-running association with Grocon owner Daniel Grollo’s father Bruno, who helped found the group with property veteran Chris Aylward in the 1990s.

Mr Aylward was a director of Grocon at its 1980s heights and remains non-executive chair of APN.

Mr Aylward told The Australian in a statement that Daniel Grollo’s woes were “totally self-inflicted”; in contrast, the property scion has blamed his company’s treatment at Barangaroo for its woes.

“His companies owe investors and taxpayers some $60m and he is trying to avoid an explanation. Is he using this money to fund his next venture? Has he been trading insolvently for three years? It’s time to for him to come clean,” Mr Aylward said.

The company is pushing for a liquidation because of what it has dubbed Mr Grollo’s tactics in using the law to the full extent to avoid paying Grocon creditors.

Mr Grollo has directed inquiries to KordaMentha.

APN wants to ensure that Mr Grollo’s personal finances are investigated and that creditors get access to returns from his successful build-to-rent business, which is backed by Singapore’s GIC.

The dramatic move was revealed in a letter to investors in the group’s development vehicle, obtained by the Australian.

The letter noted that voluntary administrators Korda Mentha had been appointed to 39 Grocon entities last month.

This included Grocon (Scots Church) Pty Ltd, which is one of the entities involved in the litigation with APN.

While the other two entities involved in APN’s proceedings, Grocon Constructors (Victoria) Pty Ltd and Grocon Constructors Pty Ltd, were not listed with Korda Mentha, the holding company of these two entities is in voluntary administration.

As part of legal proceedings, APN sought and obtained a $1.25m million security for costs guarantee 18 months ago against parent entity Grocon Group Holdings Pty Ltd, which is not in voluntary administration, although it has not filed accounts for some years.

APN has separately written to administrator, KordaMentha’s Craig Shepard, asking for a through investigation of Mr Grollo’s affairs.

Mr Grollo is slated to address the meeting of creditors on Wednesday and is likely to raise the possibility of a deed to creditors, subject to Grocon’s $270m legal action against the NSW government over a failed development deal at Barangaroo. But he has not commented on his plans.

APN said it would consider a DOCA that makes commercial sense, but only on the basis that Mr Grollo made full disclosure about the entire Grocon Group to KordaMentha.

This would include his connection to the new “build to rent” business with Singapore’s GIC and any related fees, success fees and profit shares, as well as how much was invested.

It also wants details on Grocon’s recent $75m bushfire recovery contract with the Victorian government.

It wants to know whether monies received from the Impact Investments Group at a Col­ling­wood site in inner Melbourne have been paid to subcontractors as promised.

APN has also requested full disclosure of the divorce settlement between Daniel and Kat Grollo and its impact on Grocon Group.

Mr Grollo has declined to publicly address the private matter.

APN is seeking legal advice from an independent QC on the likelihood of the case against the NSW government succeeding.

While Mr Grollo has suggested publicly that he is being victimised by the NSW government, APN disputes this view.

“We have found Daniel to be a ruthless businessman who uses every legal and commercial option available to improve his own position,” it said in letter to the administrator.

“We have no visibility on whether his legal action against the Government of NSW will be successful — hence the requirement for an independent expert view. Finally, we believe the nascent Build to Rent business may have significant monetary value and therefore importance to creditors. Only full (not managed) disclosure will bring all the relevant facts to light.

“If satisfactory answers are not given, the only course of action open to creditors is liquidation of Grocon and its related entities,” the letter said.