Unsecured creditors caught up in the collapse of Grocon’s construction business have been asked to back a proposed rescue plan by the company’s chief executive Daniel Grollo.
The 70-year-old construction group has now provided creditors across its 88 collapsed companies with a deed of company arrangement proposal (DOCA) via administrators KordaMentha.
Grocon is currently suing Infrastructure NSW (INSW) for $270-million, claiming the now-abolished Barangaroo Delivery Authority (BDA) was aware for years that the Crown and Lendlease sight lines dispute would have a material impact on its now-abandoned Barangaroo project.
The DOCA, prepared by Grollo and supported by close advisors, comes a couple of months after INSW won a court order compelling Grocon to pay a $1m security for its legal costs in order to proceed with the case.
KordaMentha said the pooled DOCA proposal provides a similar or better outcome for creditors of each of the companies in the group as the developer maintained its books, while finding no evidence of any offences.
If agreed to, the plan will provide an upfront cash contribution of $10 million to be made within 30 days of the DOCA being executed.
Grocon creditors will vote on the DOCA at a second creditors meeting on March 30.
“The key objective of the proposed DOCA is to maximise the return to creditors of the administration entities,” a Grocon spokesperson said.
“Even if the INSW court case is wholly unsuccessful, then under the proposed DOCA creditors will still receive a better, and faster, return than in a liquidation scenario.”
Grocon’s trial against INSW will be fully funded after agreeing to funding terms with an undisclosed, high-profile, litigation funder.
Grocon is currently facing creditor claims of $100 million with its largest creditor, Impact Investments Group, claiming upwards of $18m while fund manager APN has been pushing hard to claw back nearly $15m in loans made to Grocon and its related entities.
Creditors still face a long wait on any legal outcome, with litigation yet to be scheduled and expected to be heard in early 2022.