Fighting For Subbies Rights
Currently we have two builders featured in our members forum who have shut up shop and fled overseas for extended periods with no known return dates.
They owe subbies millions and have left them confused and indecisive with a trail of destruction and broken dreams.
Their QBCC licenses have been suspended and subcontractors have been left with nothing to show for their hard work.
It would be interesting to know which "Business Consultants" these directors engaged before fleeing from their responsibilities and fleecing their subcontractors.
This is how it's done when a builder has cash flow problems, usually caused by poor management, living beyond their means or premeditated theft of subbies money.
They build or buy houses in gated communities to offer a level of protection and seclusion, often with subbies money.
They splash out on fancy cars and take extended overseas family holidays.
Meanwhile, the company racks up substantial debts to subbies and suppliers that the builder knows he cannot pay.
They need a strategy to extract the absolute maximum financial return out of the wreck the company has become so they go to a "Business Consultant or Pre Insolvency Expert". They know they may be declared bankrupt and won't be able to repeat this process for the next 3 years. By then, new subbies will be available to rip off and even some of the old victims will have forgotten.
Business Consultant or Pre Insolvency Expert
A well trained business consultant knows every dirty trick in the book, his job is not to turn the company around, its primarily to:
- Assist the builder to remove assets from the company
- Hide those assets
- Protect existing assets such as the family home
- Advise the builder on how to keep creditors at bay until the plan has been implemented
- Then at the appropriate time, appoint a "friendly" liquidator.
Their advice could include ideas on how to buy time to be able to gain a stronger financial outcome taking subbies, suppliers and clients (home owners) for all they worth. This is referred to as "creditor negotiations". In actual fact, there is no negotiations, it's just lie, delay, postpone and hang on until it's too late.
The advice might be to make promises of payment and trickle feed selected subbies to keep them on the hook. This strategy is designed to slow down the legal debt collection process available to subbies. This advice could be designed to delay subbies from moving fast enough to make monies owed claims via the QBCC and use the adjudication process under the Building and Construction Industry Payments Act 2004 (BCIPA).
The Builders Role
The builder enacts the plan and it looks like this:
- Tell creditors funding is on the way
- Trickle feed subbies needed to finish money earning projects
- Change from one subbie to the next to avoid payment of claims
- Pay subbies who scream blue murder for payment - this ploy buys time with other victims
- Put asset protection plan in place (transfer or sell house and other assets and send money overseas)
- Rake in funds and hide proceeds
- Book extended overseas holiday
- Tell the company solicitor the plan
- Sack the staff and close the office
- Wipe evidence from the hard drive
- Go overseas on a one way business class ticket and take your family with you
- Leave a patsy to answer the phone and tell subbies "I am only here to keep you informed"
- Leave a patsy to collect any progress claims from clients who are uninformed
At this stage, subcontractors are left bewildered and flailing around with no one to turn to. The builder has simply closed up shop and vanished overseas.
Preventative Option for Subbies
A lot of trouble can be avoided by the way you manage your contract with the builder.
When a builder is not paying you but making promises of money coming in soon, first thing you do is go as hard and as fast as possible to collect the debt because time is of the essence so issue a breach of contract notice.
This is what BCIPA is for and the sooner you use it, the better but there is a process to this which can help you get paid.
Subbies Charges, breach of contract notices the minute they breach the contract and the PPSR register are all effective tools in many circumstances. Personally I have used them all to advantage.
"He who yells loudest will get paid first" because the builder needs time to plan and implement their crime against subbies.
Contracts Management Survival Course
There is training available so that you don't suffer losses unduly and it's not expensive. Here's a link to a building industry survival course.
Go to "Building Industry Survival Course" and make an appointment to attend the course with Wall and Ceiling who conduct it.
The alternative to the constant abuse from builders like the ones described above is to enforce your contractual rights back up the food chain. To do that you are going to have to learn to do those things that will give you a stronger platform for negotiation with the builder.
Contract and negotiation skills are essential business tools and can mean the difference between being profitable and shutting your business down.
There is now a history of trade contractors who have done this course who have shown they are now able to better administer contracts as well as showing improvements in overall profits.
It is no longer a question of whether you can afford the course but whether you can afford not to.