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Credit: EJ Yao

Grocon goes into administration, putting subcontractors and suppliers at risk of not being paid

One of Australia’s largest construction companies, Grocon, has gone into administration, leaving subcontractors at risk of unpaid contracts.

Grocon is known for developments such as Melbourne’s casino, Eureka Tower and the Rialto Towers.

Grocon’s chief executive, Daniel Grollo, blamed its administration on Infrastructure NSW for its handling of the Central Barangaroo project.

“It is unfortunate that INSW is forcing our hand to place the construction business into administration,” Mr Grollo said. 

“While I have spoken before about moving Grocon away from the construction business model to new initiatives such as Build to Rent, I did not want to call in administrators.”

Grocon’s administration could mean that thousands of subcontractors miss out on payments owed.

The Sydney Morning Herald reported that Grocon had already stopped work on an inner-city office site in Melbourne, leaving subcontractors unpaid for many months.

The ABC stated that “numerous creditors are owed tens of millions of dollars, including subcontractors who have hired tradespeople to work on the developer’s projects.”

However it is still too early to determine exactly what the knock on effects will look like.

“It’s still early days,” said Patrick Coghlan, CEO of CreditorWatch.

“Subcontractors will definitely be affected, but it remains to be seen how this will affect Grocon as a group.”

Data from CreditorWatch shows that the construction industry has been faring surprisingly well during the pandemic. 

“Our payment data suggests that the construction industry is paying their bills and compared to other industries, they’ve been relatively unaffected throughoutCOVID-19.

“However there are lots of moving pieces in large developments that can bring projects undone.

“Every administration is different, particularly ones of this size.”

Grocon goes into administration, putting subcontractors and suppliers at risk of not being paid
Source: CreditorWatch

Nevertheless Grocon is confident that it will be able to pay creditors in full. 

“My desire is to pay the creditors in full. I believe we will ultimately win the case against INSW and when we do so, the creditors will be the first in line to be compensated,” said Mr Grollo.

Grocon has had a long-standing history of struggling with government and construction union legal disputes.

Last year, Grocon put two subsidiaries into voluntary administration during a legal challenge with Dexus over a $28 million lease claim.

Most recently, Grocon has been battling Infrastructure NSW in a $270 million lawsuit.

Grocon’s current projects, the Ribbon hotel development in Sydney and the Northumberland office development in Melbourne, will not be part of the administration process.

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Ann Wen

Ann Wen

Ann is a journalist at Dynamic Business.

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