There are fears that thousands of subcontractors could lose money owed to them after the builder behind developments such as the 2018 Commonwealth Games Village and the Melbourne Casino and Rialto Towers collapsed.
Commercial and multi-residential apartment builder Grocon has declared itself insolvent and will now go into administration.
Grocon Chairman Daniel Grollo blamed the company’s failure on the New South Wales Government, asserting that the collapse was caused by a delay in its Central Barangaroo development because of a court battle over harbour views.
“It is unfortunate that INSW is forcing our hand to place the construction business into administration,” Grollo said according to nine.com.au.
However, Infrastructure NSW denies this, pointing to a NSW Supreme Court judgement which found that the company’s financial situation preceded their involvement in Central Barangaroo.
Lew Williams, chair of the Subcontractors Alliance, warned on ABC Radio’s PM program that thousands of subcontractors could be exposed.
He says subcontractors on one of the company’s office tower projects in Melbourne have experienced payment problems for as long as six months.
In response, Grocon says it is not putting that project or the company’s Ribbon development in Sydney into administration and insists that the projects will be finished and subcontractors paid.
Nevertheless, construction dispute specialist John Murray says governments should act on recommendations contained in the final report of his national review into security of payment laws released in 2018.
In particular, that report recommended that all money held by either principals or head contractors which is owed to contractors or subcontractors be held in a separate statutory trust.