Grollo doubles down in bid to protect Build to Rent business

The latest report to Grocon creditors reveals many issues remain unresolved.

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

Daniel Grollo has doubled down in the fight between the Grocon scion and creditors seeking to claw back millions of dollars.

The latest instalment in the three-way tussle between Grocon creditors, administrators and Mr Grollo reveals a barrage of letters sent following a fiery creditors’ meeting on March 30.

In a letter published in the supplementary report to creditors, the construction tycoon has rejected suggestions more money can be wrung out of corporate entities loaned millions out of Grocon.

Mr Grollo has also slapped down suggestions more money for creditors could be extracted from his “build-to-rent” Grocon Funds Management business.

Documents reveal GFM entities have received loans totalling $11.6m.

“It is important to note this business is stand-alone with a board that is completely separate to the Grocon Group and myself,” Mr Grollo said in a letter to KordaMentha

However, as The Australian has previously reported, Mr Grollo has previously referred to the build-to-rent business as Grocon and its board is composed of several long-time Grocon loyalists.

Mr Grollo’s lengthy response comes following a broadside from creditors APN who blasted the construction scion in the creditors’ meeting on March 30.

APN then followed up the verbal serve with a written riposte, launching a list of detailed questions at KordaMentha on April 1.

In that letter APN was revealed to have demanded access to “confidential and privileged legal advice” relating to Grocon’s legal attempt over the Barangaroo legal tussle that has been held up as a $270m saving grace.

The potential payouts from the legal battle between Grocon and the NSW Barangaroo Delivery Authority, over a secret deal that reportedly saw Grocon’s development cut down to size, has been held up by Mr Grollo as a potential windfall to creditors.

APN had also attempted to press the issue of the valuation of the apartment in the Eureka Tower once occupied by Mr Grollo, seeking access to “the valuation used by Bank of Queensland” for extending credit on the property.

KordaMentha administrators Craig Shepard and Andrew Knight “were somewhat surprised” to receive the letter from APN “considering the short reporting timetable that the administrators were working to”.

APN’s attempt to view legal advice was blocked by administrators noting they “do not consider that it is appropriate for APN’s lawyers to obtain access to the confidential and privileged legal advice”.

Norton Rose Fulbright partner Bernie Walrut, in a letter to administrators, revealed the firm strongly rejected attempts by APN to view the legal advice.

“To state the obvious, and without casting any aspersions on ABL’s professional duties and competence, APN’s previously stated objectives will best be achieved by ABL preparing a (public report that highlights challenges and risks in the litigation,” Mr Deleuil said.

“Creditors have the benefit of knowing that a sophisticated litigation funder has fully assessed the merits of the case, and based on that assessment, invested (and thus put at risk) millions of dollars in the pursuit of it.”

APN has pushed hard in recent meetings for creditors to tear up Mr Grollo’s proposed deed of company arrangement that would see him tip $10m into the pot to pay debts but leave many others owed large sums or waiting years for payouts.

If creditors were to vote down the DOCA Grocon could slip into liquidation, which would allow liquidators to sort through the mess of loans between related Grocon and Grollo entities that total north of $91m.

The dispute between APN and Grocon also ropes in Mr Grollo’s father Bruno and former Grocon loyalist Chris Aylward.

The Grollo family owns 8.78 per cent of APN.

Grocon’s day of reckoning has been coming for years, with the construction giant teetering on the edge as far back as 2018 after a $28m spat with Dexus saw it place two companies into administration.

APN’s recent chase of Grocon and Mr Grollo is not the first time the business has locked horns with the construction scion.

The business dragged Grocon to the High Court in 2016 over a dispute over cost blowouts at the $180m Westpac headquarters in Melbourne.

Grocon entered safe harbour in February 2019 but the current pile of 88 Grocon entities in administration has been a slow drip throughout 2020 and into 2021.

Grollo put 39 corporate entities into administration in November, before following with another three entities linked to troubled projects linked to the Impact group on New Year’s Eve.

In February of this year Grocon tipped another 45 companies into administration, which saw all remaining staff at the business made redundant including Mr Grollo, grandson of company founder Luigi Grollo.