How the Grollo’s built a Melbourne institution that changed the city’s skyline, only to watch it become corporate roadkill.
How the Grollo’s built a Melbourne institution that changed the city’s skyline, only to watch it become corporate roadkill.

The fall of the Grocon empire

The Eureka Tower, the Rialto, Crown Casino, 101 Collins St, the Emporium shopping centre, AAMI Park, the MCG's northern stand: No other developer has done more to shape the skyline of Melbourne than Grocon.

Today what was the nation's largest private building group has, in large part, collapsed leaving creditors to pick through a complicated structure of more than 80 companies, a byzantine web of intercompany and personal lending, and a semifinished Level 80 Eureka Tower penthouse subject to an ownership dispute.

The downfall of Grocon's legacy construction arm, helmed by third-generation Grocon heir Daniel Grollo, has also left frustrated creditors owed close to $100m.

Daniel Grollo. Picture: Stuart McEvoy
Daniel Grollo. Picture: Stuart McEvoy

It has raised questions about the split between personal and business interests within family companies and could test the nation's new safe harbour insolvency laws should creditors insist on liquidation.

"High profile CEOs have a habit of flying too close to the sun," one veteran Melbourne property investor observed this week.

"What went wrong at Grocon? He (Daniel) bought deals and he paid too much for them. Cashflow isn't profit."



There are no skyscrapers in Cusignana. But the story of Grocon - a builder always aiming to build something higher - starts in the Italian village located 50km from Venice.

A hard working immigrant family done good - the Grollos are a great Australian migrant success story.

Luigi Grollo, Daniel's grandfather, left Italy for Melbourne aged 18 in 1928. He spent his first 10 years in his new homeland doing anything he could - timber cutting, fruit picking, road building, mining - often living in a tent and occasionally stealing a chicken to feed himself.

He eventually settled in Carlton, picking up a job as a plasterer, marrying and having two sons, Bruno in 1942, and Rino in 1947.

The senior Grollo was good at his work and freelanced at the weekends laying concrete while his wife managed the accounts. A weekend side hustle soon became a full time business.

When Bruno dropped out of school to join the family enterprise as a 15-year-old, his father had 35 men working for him.


Rino, Luigi and Bruno Grollo.
Rino, Luigi and Bruno Grollo.


When it came time for Rino to pick up the tools, the business employed 128 men with a core focus on laying house slabs for an ever-expanding Melbourne.

The larger than life Bruno - he once took a running jump at the upper floor windows at the Rialto to prove they were safe - had bigger plans and encouraged his father to seek out larger contracts.

Key early major projects included the Mount Buller storage dam and the Reserve Bank building in Collins Street.

Bruno and his brother took over Grocon in the late 1960s.

A slew of landmarks went up in Melbourne over the next few decades including The Grand Hyatt, Rialto Towers, Shell House, 101 Collins St, Crown Casino and the Telstra Centre.

After a third generation of Grollos entered the business - Bruno's sons Daniel and Adam and Rino's son Lorenzo - some $2.5bn in assets were split in 2000.

Daniel and Adam took ownership of the construction arm Grocon while Rino and Lorenzo left with the Grollo's half stake in The Rialto, as well as tourism developments at Mt Buller.

The biggest and best was yet to come for Grocon.

Construction on the Eureka Tower started in 2002 and was wrapped up in 2006 when Daniel was serving as Grocon chief executive.


Bruno and Daniel Grollo in the early years.
Bruno and Daniel Grollo in the early years.


By 2012 Daniel had taken full control of Grocon with Bruno and his other children, Adam and Leeanna, exiting with a portfolio of properties including the QV Shopping Centre in Melbourne.

The third generation Grollo was now in full control, splitting his time between Australia and New York - a decision which raised eyebrows in business circles - and constantly on the hunt for the next big deal.

His arrival also sparked the rollout of that old family business cliche: the first generation makes it, the second generation spends it and the third generation blows it.

"My father reminds me of it regularly and has for many years," Grollo said in a 2012 interview. "There is some truth to it too. How you keep up the motivation? The drive for success?"



Grocon's foundations may be sunk deeply into Melbourne, but sky high views of the Sydney Opera House and Harbour Bridge played a key role in felling the company.

Grollo is clear and unequivocal about what killed Grocon - its dispute with the NSW government's planning authority over some of the most expensive and sought after views in the world.

"You are all here today voting as part of an administration process directly caused by the unconscionable behaviour of Infrastructure NSW," he told a meeting of creditors this week.

Grollo is suing the NSW government for $270m in damages.

He needs to win the case if creditors are to secure a full return under his proposed settlement.

It's a far cry from the start of 2018 when Grocon was selected to build Central Barangaroo, a $2bn development comprising commercial, retail, residential, public and cultural facilities across 5.2 hectares.

Chinese property developer Aqualand would fund the residential component and Westfield owner Scentre Group the retail. Except there was a hitch - a big one.

Grocon understood its project would include that most important of Sydney commodities - harbour views.


The Barangaroo project in central Sydney has been blamed for Grocon’s demise. Picture: Nikki Short
The Barangaroo project in central Sydney has been blamed for Grocon’s demise. Picture: Nikki Short


James Packer's Crown Resorts, whose $2.2bn Crown Barangaroo neighboured the Grocon development, had other ideas.

Fearing the Grocon development would block its views, Crown took the now abolished Barangaroo Delivery Authority to court and won.

The victory, secured in December 2018, locked in Crown's "sight lines" to the Sydney Opera House and Harbour Bridge and essentially capped the Grocon development.

Yet Grollo's beef with the NSW planning authority isn't just about views. He argues the authority was required to issue a "sight lines resolution notice" once its dispute with Crown was resolved. The notice would determine the exact size of Central Barangaroo.

Grocon says the Barangaroo Delivery Authority, which dropped its threat of appeal against the Crown decision in August 2019, then failed to issue the notice, despite promising to do so.

Under pressure, Grollo sold his share in Central Barangaroo for $73m in September 2019 to project financier Aqualand.

That, he says, handed Grocon a significant loss.

KordaMentha's probe into Grocon notes Aqualand had offered the builder $150m for the share a year earlier.

The Barangaroo Delivery Authority, since replaced by Infrastructure NSW, issued the sight lines resolution notice 24-hours after the Grocon-Aqualand deal was finalised. That has left Grollo bitter and suspicious - and heading to court.

"We're a family company with a finite balance sheet and we can't beat a government if that government wants to play under unconscionable rules, and that's what we've subjected to," he said when calling in administrators in November.



KordaMentha highlights the Sydney dispute as a key pressure point for Grocon.

But one of the nation's most experienced insolvency firms also points out Grocon had been struggling for years, notching up $120m in consecutive losses from 2016 to 2019.

This was a period when Grollo appears to have pushed ahead with a lavish $15m fit-out of his Level 80 Eureka Tower sub-penthouse apartment with plenty of black granite, marble, lacquer and metallic wallpaper splashed around.

It was also a period when Grocon was increasingly in and out of court.

Its battle with Melbourne boutique property investor APN Property Group over cost blowouts at the $180m Westpac Melbourne headquarters went all the way to the High Court, while a separate dispute with the nation's biggest office landlord, Dexus, served as another distraction.

In its 1567-page creditors report, KordaMentha concludes "it would appear" the legacy arm of Grocon became insolvent "around February 2019 or earlier".

Grollo sought out legal advice on safe harbour provisions at the same time.

These provisions, introduced in 2017, provide exemptions to directors from insolvent trading charges provided they are working to rescue a company from collapse.

KordaMentha says Grollo moved to shore up Grocon, albeit unsuccessfully.


Grocon’s Eureka Tower at Southbank in Melbourne. Picture: NCA NewsWire/Daniel Pockett
Grocon’s Eureka Tower at Southbank in Melbourne. Picture: NCA NewsWire/Daniel Pockett


Between February and December 2019 he settled the dispute with Dexus, sold out of Barangaroo Central, cut costs and hit up lenders for additional cash.

But Grocon's two remaining projects - the $111m Northumberland development in Collingwood and the $700m Ribbon project in Sydney - were coming under financial pressure.

Grollo sold out of the The Ribbon project in February 2020 as he desperately tried to secure cash.

Work at the Northumberland development, a 12-level inner-city office block backed by Melbourne's ultra-wealthy Liberman family, would soon grind to a halt amid cost overruns and unpaid tradies.

It is around this time Grollo made one of his most contentious decisions - one which creditors are demanding more answers around.

Grocon Group Holdings extended a $63.2m loan to the Grollo family trust Twenty Twenty2 in September 2019.

Twenty Twenty2 is jointly owned by Grollo and his former partner Kat.

The loan is part of more than $85m in inter-company and related-party lending which KordaMentha says may have run afoul of rules around voidable transactions.

These rules relate to transactions which are made when a company is insolvent or generally harms a company's financial position.

Grollo says Twenty Twenty2 used the funds to pay out a loan it had taken out with Melbourne non-bank lender MaxCap Group that had been used to provide equity and working capital to Grocon.


The Northumberland project in Collingwood. Picture: NCA NewsWire/Daniel Pockett
The Northumberland project in Collingwood. Picture: NCA NewsWire/Daniel Pockett


He considered it appropriate that Grocon provide the money to Twenty Twenty2 to repay the MaxCap facility given the non-bank lender held security over a number of Grocon assets.

But KordaMentha concludes: "The advance may constitute voidable uncommercial or unreasonable director related transactions and may warrant further investigations."

Grocon creditors now want more details about lending made from Grocon to Grollo's build-to-rent business which continues to operate.

"What we are looking for is some transparency from Daniel about what assets exist," APN representative Anthony Simpson told a fiery meeting of Grocon creditors this week.

More ominously for Grollo, Mr Simpson stressed to creditors that a liquidator would have far more power to probe lending to the Grollos.

"Under a liquidation process all of these loans can be attacked by the liquidator and clawed back," he said.

Grollo told the meeting he has always acted with creditors' best interests in mind and has provided more information into his business empire than legally required.

While avoiding specific questions on key loans, Grollo has pointed out KordaMentha's examination "found no evidence of the commission of any offences in relation to the company to report to the Australian Securities and Investments Commission".

Ultimately Grollo ran out of time and money and it was curtains for Grocon.



Grollo knows how to close a deal.

But his ability to get creditors to accept a proposed settlement which could leave some recouping just 3c on the dollar looms as his biggest test yet.

As part of the proposed settlement, Grollo will tip in $10m and also sell his level 80 Eureka Tower penthouse.

That will ensure Grocon employees and small creditors - those owed less than $10,000 - are paid in full. But larger creditors will only get their money in full if Grocon wins its case against the NSW government.


Daniel, with estranged wife Kat, is tipped to bounce back from Grocon’s demise.
Daniel, with estranged wife Kat, is tipped to bounce back from Grocon’s demise.


Creditors will vote later this month whether they will accept the deal or liquidate the Grocon companies.

A move to liquidate Grocon will spark further investigation into a maze of intercompany lending, along with sustained legal battles over claims on the assets of Grollo and his former wife.

If Grollo is found to have traded while insolvent or breached rules around voidable transactions, a liquidator could lay claim to personal assets.

KordaMentha has recommended creditors take Grollo's deal, noting the time and expense of liquidation means they are likely to end up with less.

It also notes Grollo would be able to seek protection via the safe harbour insolvency protections, although KordaMentha administrator Craig Shepard conceded in questioning from creditors that those protections have never really been tested in court.

Grollo won't be keen to be a test case.

But, says a Melbourne business figure, he is far from done and dusted, noting his build-to-rent business is proceeding with the Richmond Plaza shopping centre redevelopment on Bridge Road and another in Southbank.

"Grollo is a great survivor - very talented but he seems to have made a lot of enemies along the way," he said.

Originally published as The fall of the Grocon empire