Mounting pressure on Grocon has forced the developer to place two companies that owe creditors into voluntary administration.
FTI Consulting has been appointed as voluntary administrator of two Grocon entities, Grocon Constructors (Qld) and Grocon Constructors (Vic), which could slow legal efforts by diversified property giant Dexus to get Grocon to pay $28 million outstanding.
The fallout between Grocon and Dexus occurred last year after Dexus demanded repayments of debts relating to Grocon's 31-level 480 Queen Street tower in Brisbane's golden triangle precinct.
Dexus bought the tower from Grocon in 2013 on a fund-through basis while it was under development.
Dexus claims that unpaid lease obligations from Grocon, from a period of three years, over commercial space it occupied at 480 Queen Street, failing to comply with earlier repayment plans.
Grocon said the operations of the two dormant employee-less subsidiaries, now controlled by FTI, had been scaled down.
“Both parties have not been able to agree payment terms, which has subsequently led to the existing and ongoing court case,” Grocon executive chairman Daniel Grollo said.
“Voluntary administration is not uncommon in situations such as this but not an option Grocon has ever adopted.”
Grocon went onto state that the administration of the two entities would not affect the builder’s other projects, including The Ribbon in Sydney and Northumberland in Melbourne
“Grocon has developed and constructed billions of dollars of real estate for Dexus over the years and its attitude to this matter is both unreasonable and disappointing,” Grollo said.
“Unfortunately, Dexus’ reluctance to wait until the Court matter is concluded, means that Grocon has been left with no choice.”
Grocon is already under pressure in Queensland after losses on building the Commonwealth Games Village on the Gold Coast where it copped fines for alleged late payments to subcontractors.
The Melbourne-based company is also locked in legal battles with two other major property managers—APN Property Group and GPT Group.
APN Property launched a counterclaim against Grocon stating it was owed almost $36 million in regards to its Scots Church development on Collins Street in Melbourne.
Earlier this year, GPT, led by Bob Johnston, served Grocon with a Supreme Court debt demand for $21 million owed for leasing deals with corporate clients.
