KordaMentha has been appointed as administrators across 39 Grocon companies, with upwards of $60 million left owing to creditors.
Grocon managing director Daniel Grollo said the group would call in administrators last week and now, Andrew Knight, Craig Shepard and Mark Korda of KordaMentha Restructuring have been appointed.
Grocon maintains the collapse of the group’s construction companies was directly correlated to Infrastructure NSW’s handling of the developer’s planned Sydney Central Barangaroo project over the last five years.
Grocon bought into Barangaroo in 2013, spending $40 million with hopes to build a $1.4 billion apartment tower alongside Canada’s Oxford Property Group and a shopping centre giant Scentre Group.
But it had to sell out when it lost the right to block Crown Resort’s Barangaroo One views and that of a three-tower Lendlease development.
Grocon has maintained it would have been able to sell its stake for much more, had the views been protected.
Grocon claims it has since missed out on a windfall from selling its planned $1.5 billion skyscraper to the real estate investment arm of Canada’s OMERS, Oxford Properties, on which it would have received an upfront $116 million and ongoing development fees.
Infrastructure NSW has rejected the claim in the NSW Supreme Court and demanded that $1 million be held on trust because it feared Grocon would be unable to pay its costs if it lost the case.
The embattled Grocon entities, which include Grocon Pty Ltd (previously called Grocon Constructors), Grocon Services, Grocon Operations, Grocon Developments and Grocon Development Holdings, are now in the hands of KordaMentha.
Knight said the administrators were appointed to 39 Grocon companies, but not the companies associated with Grocon’s current ongoing projects.
Those companies are in the process of suing the NSW government department for $270 million over what Grollo claims is “unconscionable conduct” by the body over its treatment during its time at Barangaroo.
Grocon has been in court for months against state development authority Infrastructure NSW.
Last week global giant Lendlease intervened in the legal case, seeking to ensure its dealings with the body were kept confidential.
“The Grocon companies involved in litigation with the NSW government are also not in administration and remain in the control of Daniel Grollo,” Knight said.
“We understand that these projects will continue while the future of the Grocon Group is decided.
Grocon’s “The Ribbon” development in Sydney and the Northumberland development—a $111 million 12-storey office development in Melbourne’s Collingwood—are not be included in the administration entities.
“Our priority is to assess the business and begin to work towards finding the best outcome for all stakeholders,” Knight said.
The first meeting of creditors will be held on 9 December with the future of Grocon set to be decided at a second meeting of creditors, which will likely to be held mid to late December.
Grollo remains hopeful that a settlement with the NSW government will provide the funds needed to repay creditors and get the cash-strapped business back on its feet.
Three generations of the Grollo family, starting with Luigi in 1954, turned it into a property dynasty that was passed on to Bruno and Rino, and then on to current boss Daniel.
He took full control of the construction company in 2012, with brother Adam and sister Leanna taking over the property portfolio management.
The developer has been responsible for a number of storied projects including the Rialto and Eureka Towers, Crown Casino, 101 Collins Street, AAMI Stadium and redeveloped the MCG in Melbourne and 1 Bligh Street, 161 Castlereagh and 1 Martin Place in Sydney.
In Queensland Grocon constructed the Oracle at Broadbeach, 480 Queen Street in Brisbane and 55 Elizabeth Street Brisbane.