This article is from the Australian Property Journal archive
DANIEL Grollo’s Grocon has reached an agreement with creditors over two dormant subsidiaries it put into voluntary administration, thereby avoiding liquidation.
Credits including Australia’s largest office landlord Dexus have agreed to $4 million deed of company arrangement (DOCA), rather than liquidate the companies which would have resulted in a lower return or ending the administration, which would have left the companies insolvent.
According to administrators FTI Consulting, the estimated return to unsecured creditors is between 7.9 and 10.6 cents in every dollar.
The DOCA agreement ends a long running battle between Grocon and Dexus over a $28 million debt owed.
Late October, Grocon called in FTI Consulting to subsidiaries Grocon Constructors (Qld) Pty Ltd and Grocon Constructors (Vic) Pty Ltd.
At the time, executive chairman Daniel Grollo said the decision was “regrettable”, but it had no choice because Dexus’ attitude was “unreasonable and disappointing”.
“Unfortunately, Dexus’s reluctance to wait until the court matter is concluded, means that Grocon has been left with no choice. The voluntary administration process will ultimately resolve the situation,” Grollo said.
Grocon sold the 480 Queen St tower to Dexus and the Dexus Wholesale Property fund in 2013 for $543.9 million and provided a two-year income guarantee on any remaining vacancies at practical completion. Furthermore, as part of the deal, Grocon was responsible for the “lease tails” of those tenants who vacated other office buildings to relocate 480 Queen St.
Dexus saw it differently and hit back at Grocon’s statement. The property giant said it had issued statutory demands on Grocon seeking to have the debt paid and Grocon challenged these in court alleging abuse of process.
“It should be noted that Dexus did not commence proceedings against Grocon. Statements within the Grocon media release are factually incorrect and Dexus provides the following information for clarification.
“Grocon has had debts outstanding to Dexus and a funds management partner for more than three years relating to a lease of premises at 480 Queen Street, Brisbane.
“Grocon entered into several binding agreements to repay the debt owed and had not complied with these, despite repeated requests to do so and Dexus granting extensions to the scheduled payment dates,”
