Developer Grocon has seen its financial and operational position pushed to the limit as it continues to deal with its costly exit from Sydney’s harbourside Barangaroo precinct.
Earlier this week, the Daniel Grollo-led company filed documents with the Australian Securities and Investments Commission stating that annual solvency resolutions had not been passed.
A Grocon spokesperson said the company, which has been pushed to the brink by the pandemic and its ongoing legal woes over protected views at neighbouring Crown Resorts and Lendlease developments, had left company directors with no choice but to file a Form 485 with ASIC.
“[This is due] to the challenges faced by the construction industry during the Covid-19 pandemic, and Grocon’s ongoing legal action in the NSW supreme court (seeking compensation for the financial losses the company experienced as a result of major delays in Central Barangaroo project).”
However, it is understood the Barangaroo legal matter is the main cause of Grocon’s financial difficulties having missed out on a number of major deals and forced to sell out of the Barangaroo precinct to fellow developer, Chinese-backed Aqualand.
In 2018, Grocon lost a court case to Crown Resorts and Lendlease before settling with the pair in 2019, protecting their views from neighbouring Barangaroo of a vista including the Sydney Harbour Bridge.
Grocon 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.
The developer, now locked in a new court battle, is effectively seeking $270 million in damages after being cut out of a secret settlement made between neighbouring developers and Infrastructure NSW.
The settlement effectively protected views from Crown and Lendleases’ multi-billion towers in the neighbouring Barangaroo South precinct, alledging the NSW government effectively sold the same famed Sydney Harbour views, twice.
Grocon is arguing that Infrastructure NSW’s failure to issue a crucial notice stating the sight lines dispute had been resolved meant that it could not complete the deal with Oxford Properties.
Last month the court ordered Grocon to pay $1 million into trust against the NSW government’s legal costs after the government questioned its financial stability.
The developer was also banned from commencing projects in Queensland in 2017 after blowouts on projects including the athletes village for the Gold Coast Commonwealth Games topped $1 billion.
Grocon has also put two of its subsidiaries into administration lat last year amid a legal battle with landlord Dexus, which was claiming $28 million in allegedly unpaid rent.
In July last year, a federal court judge reduced the amount owing to $13.9 million; Grocon appealed the ruling but the case was settled in November last year.