Grocon has called in administrators over the group’s construction companies, citing its loss from Infrastructure NSW’s handling of the Sydney Central Barangaroo project.
In a Friday announcement, Grocon—led by property scion Daniel Grollo— said administrators had been contacted over the group’s legacy construction companies.
Grollo would not confirm which entities were being placed into administration but told The Urban Developer that 52 entities throughout the organisation would be going into administration.
Grocon’s “The Ribbon” development in Sydney and the Northumberland development—a $111 million 12-storey office development in Melbourne’s Collingwood—would not be included in the administration entities.
Grollo's grandfather Luigi founded the business in 1954.
On Thursday, The Sydney Morning Herald reported that construction on Grocon’s Collingwood Northumberland project had ceased work with growing concerns that subcontractors have not been paid for up to six months.
“The developer and contractors at Collingwood are people we want to collaborate with and finish that project,” Grollo told The Urban Developer on Friday.
“It’s important to note that Grocon hasn’t been paid since 1 May for the Collingwood project.”
“From our perspective, the main restriction on our funds is Infrastructure NSW.”
The embattled private developer is embroiled in a $270 million legal battle with the New South Wales government over Central Barangaroo — the $2 billion shopping centre and office development on Sydney Harbour.
In what Grollo describes as “probably the biggest battle of Grocon’s life”, it is currently taking legal action for compensation in the NSW Supreme Court against INSW, the government agency handling the Barangaroo precinct since the closure of the Barangaroo Development Authority (BDA) in July last year.
Grollo said the conduct of INSW in its handling of Grocon’s participation in the Barangaroo project has led to the administration, and impacted creditors of the Group.
“It is unfortunate that INSW is forcing our hand to place the construction business into administration,” Grollo said.
“My desire is to pay the creditors in full.
“I believe we will ultimately win the case against INSW and when we do so, the creditors will be the first in line to be compensated.”
Confirmation was not made on the outstanding amount owed to creditors.
In September, the court ordered Grocon to pay $1 million into trust against the NSW government’s legal costs after the government questioned its financial stability.
In a fight over Sydney harbour views and sight-lines, the legal woes started when Crown and Lendlease won its court case against the INSW over Grocon's Barangaroo project obstructing views of its casino development.
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.
“It’s a project we’ve had in our pipeline for six years, and the project shouldn’t have taken more than a year or two to bid.
“We spent $40 million bidding on it […] thousands of hours of work and no result,” Grollo said.
“We find that very difficult.”
Grocon has faced a series of legal challenges, most recently with property giant Dexus, APN Property Group and GPT.
Last year, mounting pressure saw Grocon place two subsidiary companies, Grocon Constructors (Queensland) and Grocon Constructors (Victoria), into voluntary administration.
FTI Consulting was appointed as voluntary administrator over the two Grocon entities, which were involved in a legal battle with Dexus over a $28 million unpaid lease dispute.
Grollo said on Friday that further details on the legacy construction companies and the appointed administrator would be released publicly in the coming days.