Creditors Decide Against Liquidating Grocon
Creditors have determined collapsed construction group Grocon will not be placed in liquidation after voting in favour of a revised rescue deal.
Administrators KordaMentha were appointed in November, and in March, their epic 1500-plus page report revealed the largely dormant 88 subsidiaries in their hands had greater liabilities than assets and had likely been insolvent since February 2019.
Including about $14m owed to the Australian Taxation Office in unpaid GST and excluding a complex web of intercompany loans, the group owes creditors about $100 million in total.
KordaMentha recommended placing the entities into a deed of company arrangement rather than winding them up, saying the rescue plan was in creditors’ best interests given administrators were “not certain of the recoverability of the companies’ assets in a liquidation scenario”.
At a meeting on Thursday, creditors backed Grocon chief executive Daniel Grollo’s sweetened offer to them, which involved him adding, from his own pocket, $3.32 million on top of a previously pledged $10 million into the pool of funds to be distributed.
The ATO gets $6 million of that – almost double what was originally proposed – and some creditors, including APN Property, are reportedly furious, describing the revision as a backroom deal.
Mr Grollo’s revised proposal lifted the ATO’s return from 20.5 cents in the dollar to 43.9 cents in the dollar.
The result for other creditors remains largely the same – 100 cents in the dollar for employees and small creditors and 2.9 cents in the dollar for large creditors, up from 2.8 cents previously.
APN had pushed for a winding up, suggesting creditors could pursue Mr Grollo’s assets, including luxury apartments, and had even previously threatened legal action to set aside the settlement proposal, if approved.