Grocon Group Holdings will be placed into administration alongside 39 subsidiaries as the $1 billion collapse of the construction business plays out in the New South Wales Court.
Grocon chief executive Daniel Grollo said placing Grocon Group Holdings in the hands of administrators was a necessary step in preparing for a protracted court battle against Infrastructure New South Wales (iNSW) over the maligned Central Barangaroo sight lines decision.
Grocon is pursuing compensation claims to the tune of $270 million.
“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 iNSW would rather put Grocon out of business than take responsibility for its actions,” Grollo 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.”
Grollo said KordaMentha would be appointed as administrators for Grocon Group Holdings. They are currently administrators for 39 Grocon subsidiaries placed into administration last year.
Grocon has claimed the now abolished Barangaroo Delivery Authority was aware that the Crown and Lendlease sight lines dispute would have an impact on its design for the failed $2 billion shopping centre and office development at Central Barangaroo, but that it withheld this information.
In September iNSW won a court order compelling Grocon to pay $1 million of security for its legal costs to proceed with its case against the NSW government.
“The cause of this administration I firmly put at the feet of Infrastructure NSW," Grollo told a creditors meeting in December.
“Little did we know then that I would be standing before you today as a result of the subsequent unconscionable behaviour of iNSW.
“We will continue to pursue this proceeding as a primary initiative of the organisation. I hope that in the time ahead we can propose a deed of company arrangements that will see creditors paid amounts owing to them, from the proceeds that flow from our court case against iNSW.”
Grocon says it was forced to sell its development rights in a “fire sale” to consortium member Aqualand in 2019 due to financial difficulties, six years after it began investing into the major Sydney harbour project.
Grocon has maintained it would have been able to sell its stake for much more, had the views been protected.
Grollo's grandfather Luigi founded the business in 1954.