This article is from the Australian Property Journal archive
DANIEL Grollo’s Grocon and the NSW government have agreed to terms on their long-running Central Barangaroo dispute, but creditors of the collapsed developer will receive just a sliver of their hoped-for final distributions.
The Australian reported that the NSW government will pay Grocon less than $27 million – not even 10% of Grocon’s $270 million claim.
Grocon CEO Daniel Grollo had intended to use the proceeds to repay at least $104 million owed to creditors of 88 Grocon companies in administration, having avoided liquidation and secured a deed of arrangement.
At the time, some creditors including APN Property were reportedly furious over the revised deed of arrangement which included a $6 million upfront payment to the Australian Tax Office.
That’s because the ATO’s return increased from 20.5 cents in the dollar to 43.9 cents, whilst for other creditors it remains at a similar level for employees and small creditors and 2.9 cents for large creditors, up from 2.8 cents.
Yesterday’s settlement was made possible thanks to litigation funder CASL which invested $7 million to sue the state government. After CASL receives a return from its investment, the remaining funds will be used to pay creditors.
Grocon had suffered a string of issues relating to the $2 billion Central Barangaroo project, which it was developing as part of a consortium with Aqualand and Scentre Group after being awarded the development rights at the start of 2018.
An out-of-court settlement between the government and Crown and Lendlease to protect sight lines from the neighbouring new casino left Grocon without the views and scale it was promised, Grocon claimed, and that ongoing delays to the project and uncertainty due to the government’s own stoush with Crown and Lendlease created financial difficulties, and that it led to the company selling out of the project at a heavy discount.
Grocon offloaded its interest in the project to Aqualand for $73 million, only for Aqualand to be given clarification for what could be built at Central Barangaroo the following day.
Grocon took the state government to the NSW Supreme Court, seeking $270 million and attempting to have the details of the Crown and Lendlease agreement made public.
Grocon also blamed Infrastructure NSW – the responsible authority for the Barangaroo precinct – for the woes that led to administrators being called in for its construction business.
A NSW parliamentary inquiry concluded the state government had “treated Grocon unfairly, and was not transparent and forthcoming in providing information to Grocon, particularly about the sight lines resolution”.
