The collapse of the construction arm of Daniel Grollo’s Grocon pits the property scion against boutique Melbourne fund manager APN Property, which is backed by Daniel’s father, Bruno, and is claiming status as a creditor.
The awkward son-versus-father scenario has emerged after APN chairman Chris Aylward fired off a strongly worded letter to Grocon’s administrator, urging KordaMentha to include in its investigations Grocon’s successful build-to-rent business while warning the builder and developer may have been trading while insolvent.
The Australian Financial Review does not suggest APN’s insolvency concern is correct, and there has been no finding that Grocon was trading while insolvent.
APN, on behalf of one of its development funds, is claiming status as a creditor through a long-running dispute centres on the cost of Grocon’s construction of Westpac’s Melbourne headquarters on Collins Street.
“Our claim against Grocon is for $14.9 million plus interest and costs,” Mr Aylward wrote this week, in a letter subsequently to investors in the fund.
“This is not our money. It is the savings of ordinary Australians via their superannuation. This matter is before the Supreme Court of Victoria.”
Chris Aylward was himself a founding investor in Grocon before selling out. He moved on to set up the funds management business with Bruno as a co-investor. The pair has maintained a strong relationship since.
Victoria Square, an investment vehicle co-owned by Bruno and Daniel’s brother Adam, retains a stake in ASX-listed APN Property.
An initial report into Grocon’s collapse this week, ahead of the first creditors’ meeting on Wednesday, revealed a complex web of subsidiaries and inter-company loans with the developer owing millions to both internal and external creditors.
Led by Daniel Grollo, Grocon has been keen to keep its thriving build-to-rent business, backed by Singaporean sovereign fund, separate from the administration which so far involves 39 of its subsidiaries. With projects earmarked in Sydney and Melbourne and a 2000-apartment pipeline, the BTR business boasts $2 billion in total forecast investment.
As part of a longer list of demands, APN said it supports KordaMentha’s appointment as long as the administrator ensures full disclosure of Grocon’s build-to-rent business, including any monies invested in it and any profit share.
“If satisfactory answers are not given, the only course of action open to creditors is liquidation of Grocon and its related entities,” Mr Aylward wrote.
“If, as we suspect, Grocon has been trading insolvent for some three years, this should provide a better outcome for creditors.”
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