A key meeting to decide Grocon’s fate has been delayed after an aggrieved creditor demanded more information about tens of millions of dollars in loans by the collapsed construction group from its chief executive Daniel Grollo.
Outside of a complex network of intercompany loans, the group owes its creditors around $ 100 million.
Mr Grollo – the third generation of his family dynasty – hopes to pay them back by winning a lawsuit estimated at least at $ 200 million against the government of New South Wales over the sightlines of the Central Barangaroo project in Sydney .
Directors KordaMentha said in his recently filed 1,567-page report that there were aspects of Grocon’s loans to Mr. Grollo or to companies owned by him and his ex-wife Katherine – which are outside of the 88 entities. under administration – which could and / or unreasonable transaction related to the directors ”.
They started in 2010 and have been used for a variety of purposes including renovating an apartment in the United States.
However, KordaMentha questioned the likelihood of collectability in a liquidation scenario and instead recommended entering into a Corporate Arrangement Deed (DOCA), saying it was in the best interests of creditors.
In a letter to directors last week, creditor APN Property Group demanded an adjournment to the second creditors meeting of at least 45 days, calling for more transparency on loans to Grollo family entities and more. information on appraisals of properties owned by the now estranged couple.
He also questioned the directors’ independence from the Grollo family, which KordaMentha vehemently rejected in a response letter.
“Your suggestion that the directors have some sort of relationship with the Grollo family, so that our independence can be affected, is unfounded and refuted in its entirety by the directors,” said director Craig Shepard on the eve of the Tuesday meeting.
Instead, Mr. Shepard used his discretion to adjourn for up to 10 working days, warning that the delay and extra work would result in additional costs.
Mr Grollo told creditors he has already provided more information than necessary and will offer more, although that probably won’t be enough to appease everyone.
In view of the Easter break, the meeting will likely resume in mid-April.
APN has even threatened legal action to overturn the proposed settlement if approved in its current form, under which an upfront payment of $ 10 million will pay off outstanding employee rights and small creditors, while the proceeds of the litigation against Infrastructure NSW, will be heard next. year, will be used to fully repay the largest creditors.
“The directors do not consider it useful or appropriate to threaten legal action in an attempt to influence us in the performance of our duties,” said Mr. Shepard.
“The report we have prepared and the opinions and recommendations referred to therein are sound, precise and properly reflect what we consider to be in the best interests of creditors, taking into account all the circumstances and our statutory obligations.”
But APN is pushing for a liquidation, suggesting that creditors can sue Mr Grollo’s assets and seeking appraisals for a 658m2 penthouse on the 80th floor of Eureka Towers in Melbourne, built by Grocon, on which Katherine Grollo made a claim.
KordaMentha also noted in its epic report that the collapsed businesses were likely insolvent since at least February 2019, when Grocon investigated whether it was eligible for the Safe Harbor provisions with respect to insolvent trade receivables.
Directors said Mr Grollo could likely rely on Safe Harbor laws, which are meant to encourage the pursuit of bailouts, offering protection if the director can show debts incurred during the insolvency were part of it. a course of action which was reasonably likely to lead to a better result than if an administrator or liquidator were appointed.
The group was founded as a concreting company by Mr. Grollo’s grandfather, Luigi, in the 1940s.