Grollo escapes liquidation of collapsed Grocon empire
Property scion Daniel Grollo has avoided the humiliation of his collapsed Grocon construction empire being liquidated after the tax office and creditors of 88 failed companies voted to accept an arrangement that will see small creditors and employees paid out.
Creditors met on Thursday to vote on Mr Grollo’s proposal for an amended Deed of Company Arrangement (DOCA), which included a $6 million upfront payment to the Australian Tax Office (ATO) and a full payout of employee entitlements and small creditors owned less than $10,000.
The tax office, owned $13.7 million in GST payments by Grocon companies, was Mr Grollo’s largest creditor and critical in supporting the vote to approve the revised arrangement.
It will now get a payout of 43.9¢ in the dollar.
The tax office said it would back the arrangement because of the significant uncertainty in recovering funds if the companies were put into liquidation.
“The Commissioners will support the proposed final amended Deed of Company Arrangement as it is considered to be in the best interest of creditors,” a tax official said.
The payout to former employees is expected to be made in a relatively short period following execution of the deed, administrator KordaMentha’s Craig Shepard said.
The amended arrangement included a cash contribution of $13.32 million for creditors, up from the $10 million Mr Grollo originally proposed. Grocon collapsed owing about $104 million.
Larger creditors, some of them subcontractors who will get a payout of just 2.9¢ in the dollar, resisted the arrangement, but small creditors and employees were in favour.
“Six months of uncertainty without a backup financial umbrella, has put a lot of pressure on myself, and I suggest, all suppliers and many other creditors,” one former Grocon employee said.
A majority of creditors by value and number was needed to back the arrangement for it to be adopted.
Mr Grollo attended the meeting but did not speak.
One large creditor, APN Property Group, questioned why administrators had written down the value of $2.7 million in payments made to four other Grocon entities about two months before the administrators were appointed to take control of the collapsed empire.
In total, administrators identified about the $94.4 million in intra-company loans.
Mr Grollo and his ex-wife Kat are embroiled in divorce proceedings but the administrators said Ms Grollo would make no further claims on company assets in the Eureka Tower if the deed was accepted.
Mr Grollo blames the collapse of his empire on a $270 million legal dispute with Infrastructure NSW over the Central Barangaroo development in Sydney. Infrastructure NSW is defending itself in the Supreme Court against the claims.
Under the deed arrangement, Mr Grollo has promised to payout creditors if he wins the case.
