Grocon on brink, in talks to appoint administrators

The Grocon building empire remains on the brink with talks to determine its future focused on the appointment of administrators.

Grocon chief Daniel Grollo insisted last week he would pay out creditors, saying they would be first in line if the company won its $270m legal action against the NSW government. Picture: Stuart McEvoy

The iconic Grocon building empire remained on the brink over the weekend with talks to determine its future focused on the appointment of administrators.

Industry observers said Melbourne-based KordaMentha was most likely to pick up the appointment, but Grocon said it was yet to make a move.

Grocon on Friday had indicated that it would put its construction business into administration over the weekend and has not wavered from plans to shift away from legacy building companies founded by Grocon chief Daniel Grollo’s grandfather Luigi 73 years ago.

The impending collapse will be one of the highest-profile casualties of the coronavirus crisis, although Grocon had run into trouble on Queensland projects ahead of the pandemic and had shrunk the size of its building business.

Long-running disputes relating to its Queensland business had blighted the company and FTI Consulting was called into this area as administrator last year.

Two subsidiaries owed listed property group Dexus and smaller creditors about $39m but the private company agreed to pay $4m via a deed of company arrangement.

The creditors were to be paid in four instalments with only one more to come, FTI Consulting confirmed.

A separate legal dispute between Grocon and listed landlord GPT was settled out of court earlier this year.

The pair have been in a dispute over lease obligations at the Riverside Centre in the Brisbane CBD and Grocon lodged action in the Victorian Supreme Court after GPT hit it with a demand for almost $21m in 2019. But the listed group confirmed that the dispute had been settled.

The most recent troubles were triggered by a dispute on a site in the inner Melbourne suburb of Collingwood where Grocon is building a tower for Impact Investment under a fixed price contract.

Sub-contractors are owed about $8m and Impact may terminate it as builder, although Grocon claimed not to have been paid since May. Impact disputes that claim.

Whenever administrators have been called in, the move has been structured so that Mr Grollo can continue his firm’s legal fight over what he called the “unconscionable” conduct of NSW government agency Infrastructure NSW over its treatment of the company at the long-delayed Central Barangaroo project in Sydney.

Mr Grollo insisted last week he would pay out creditors, saying they would be first in line if the company won its $270m legal action against the NSW government. But much hinges on winning the case or it being settled in Grocon’s favour.

“My desire is to pay the creditors in full. I believe we will ultimately win the case against INSW and when we do so, the creditors will be the first in line to be compensated,” Mr Grollo said.