Rob Berry - Subbies United
When you think about what is to come when Government stimulus is wound back later this year, this reform could be timely. There will be an avalanche of building industry insolvencies and many subbies will be in for a rough ride.
The Government announcement for chapter 11 law reform will allow Subbies and suppliers to negotiate with creditors if they become insolvent.
Subbies owing less than $1m dollars to creditor can effectively continue on and finish their projects to get paid then pay suppliers.
If a Builder is refusing to pay a Subbie, the new laws allow the subbie the time required to fight the Builder through BCIPA or the Courts without fear of insolvent trading.
In the event the Builder has gone under, Subbies can offer a comprise (a discount) from suppliers / creditors within 20 days to be accepted by all creditors with a further 15 days.
Key to using these new laws:
- Keep your bookwork up to date- if you need to restructure and offer creditors less than you owe them, you need to know exactly where you're at financially.
- Keep on top of overdue invoices - cash flow is king.
- Communicate with suppliers and creditors- in the event things go wrong. Asking for a discount from someone you haven't spoken to in a while is ominous.
- Use the PPSR. As a minimum put the below clauses on ever quote, invoice, progress claim;
“You hereby acknowledge that these Terms and Conditions of Trade constitute a Security Agreement which creates a Security Interest in favour of [the supplier/subcontractor]…”
“The Purchaser and the Supplier agree that the following provisions of the PPSA do not apply to the enforcement by the Supplier of its security interest in the Goods: sections 95, 118, 121(4), 130, 132(3)(d), 132(4), 135, 142 and 143.”