Grocon collapse widens, claiming Daniel Grollo’s luxury penthouse

Grocon CEO Daniel Grollo has been sacked from the company founded by his grandfather as the collapse of the builder widens.

Daniel Grollo. Picture: Stuart McEvoy for The Australian.

Grocon chief executive Daniel Grollo, along with all executives at the once iconic builder and developer, have been made redundant as the latest wave of administrations rips through the company.

The departure of Mr Grollo ends the chain of members of the Grollo family at the operation started by his grandfather Luigi Grollo, although other branches of the family remain prominent in the property industry.

The sudden move by the company, synonymous with Melbourne skyscrapers, could put Mr Grollo’s luxury sub-penthouse in the city’s Eureka Tower on the chopping block, after the construction scion placed 45 more corporate entities into administration on Monday.

The departure of Mr Grollo from the business was confirmed by a Grocon spokeswoman. The company is continuing to blame the actions of Infrastructure NSW at Sydney’s harbourside Barangaroo precinct for its woes and is pursuing a $270m legal action, which the state development body is defending.

Mr Grollo was among 20 staff who were made redundant two weeks ago, before the announcement made on Monday that 45 additional Grocon corporate entities would be placed into the hands of KordaMentha.

The restructuring firm had been handling the administration of 42 Grocon entities and will now combine the additional 45 into a joint administration. Monday’s move widens the collapse to 87 Grocon corporate entities, capturing major companies that had so far avoided going over the precipice.

The move was flagged by Grocon on Sunday, issuing a statement saying it would take the step to ensure victory in the court case in NSW.

A potential $270m windfall from a victory against the NSW government has been floated by Grocon and it had flagged it would take another step in its battle with the NSW government by placing “several subsidiaries into the hands of administrators”.

The collapse now includes the parent entity of Grocon’s legacy construction business, Grocon Group Holdings.

Creditors which had made claims against Grocon in earlier rounds of the collapse noted the significance of the construction empire’s parent entity going into administration.

Mr Grollo said the move to place the further businesses into administration was necessary in its preparation for the court showdown with the NSW government.

“Sadly, there is a human toll to this action with 20 staff no longer employed. I didn’t want it to come to this, but I have had to accept the fact that NSW would rather put Grocon out of business than take responsibility for its actions,” he said.

“We need to focus on winning the court proceedings so we can compensate the Group and its creditors.

“But to achieve this, we have to close down most parts of the legacy Grocon construction business to avoid financial resources being allocated away from this fight.”

Mr Grollo was among those 20 who were made redundant, including the company’s entire executive team.

A recent report to creditors found Mr Grollo was entitled to $1m in annual leave entitlements, however at the time a Grocon spokeswoman said he would “pay all other genuine creditors before he paid himself”.

Mr Grollo was also found to owe Grocon almost $11m in loans taken from the group.

Mr Grollo’s level-80 luxury sub-penthouse in the Eureka tower is now in the mix after Grocon’s subsidiary and owner of the property the Grocon ET 80 corporate entity was also tipped in.

Almost $15m was spent fitting out the luxury apartment which holds 360-degree sweeping views of Melbourne.

Creditors had been chasing Mr Grollo and his apartment in a recent creditors meeting, which revealed his 42 corporate entities that were earlier tipped into administration owed $22m to trade creditors.

An unknown $144m transaction, made last September, which incurred a $14.4m GST bill is also in the crosshairs of creditors, with many clamouring to know what created the tax bill. 

The extra 45 companies do not add to the GST bill.

Grocon Group Holdings is among the entities battling it out in the courts with the NSW government.

Two Grocon companies involved in the legal action against the NSW government remain out of administration and retain Mr Grollo as director.

Grocon had been tipping an expected victory in its legal battle with the NSW government as the saving grace for the ailing empire.

The construction giant had alleged it had lost out on a $270m windfall over the sale of its Barangaroo development.

Grocon had suggested a secret deal with the Barangaroo Delivery Authority, Crown Resorts and rival developer Lendlease capped its potential tower height and it was forced to sell out to partner Aqualand.

However, the list of companies includes many with little connection to the NSW court battle, such as the corporate entity the QV car park.

As part of the restructure of the Grocon empire, when Grollo scion Bruno split the empire between his children, the QV Building was pulled out of the group.

The collapse of Grocon started slowly, with the company waving the white flag last November, almost 70 years after Luigi Grollo founded it.

But the company had been teetering on the edge for years after it was split, then split again, with the group suffering heavy losses on Queensland projects and fighting court battles with Dexus and GPT.

Grocon had been behind some of Melbourne’s landmark buildings, including the Rialto and the QV Building.

The company had survived a split down the middle in 2000 between the son’s of company founder Luigi, with half going to Bruno Grollo’s sons Daniel and Adam, while the other half went to Rino Grollo and his son Lorenz.

Grocon again split in 2011 between Bruno’s children: Daniel, Adam and Leanna.

While lucrative assets were divvied up between the children, that split left the development company exposed and without a strong capital base to fall back on in the event of things going awry.

Daniel’s brother Adam and father Bruno are also shareholders of ASX-listed APN Property, where chairman Chris Aylward has been strongly critical of Grocon’s recent moves, and has been seeking to recoup funds owed from a soured property project.

An APN spokesman said despite the move to place more Grocon companies into administration a liquidation was the best way to deal with the companies.

“While this should bring more reach and transparency for the administrators, we still believe a liquidation may be best route for creditors with some of very large amounts which appear to have been paid out to fund Grocon related parties,” he said.