Apologies for dragging this article out but when I think its nearing the end, something else comes to mind. By the time I finish it will be a bigger book that War and Peace.
Where were we? Oh yeah;
Pre-insolvency advice comes in many forms. At times they dress themselves up as the good guys trying to get someone out of a tough spot but their main aim is to protect assets and defeat creditors. All creditors, subbies, banks, ATO, staff, basically anyone and everyone the company director owes money to.
But mainly subbies, they are always the biggest creditors and to make it worse, they are almost always unsecured.
Here is a copy and paste from a pre insolvency advice firm;
“You may need to put asset protection measures in place if you have:
- Signed personal guarantees to trade creditors
- Division 7A loans
- Advanced your company money from personal resources
- Lodged your BAS or SGC late
- Used the same financial institution for both home loan and business facilities
- Acted as an individual trustee of a discretionary trust
- A sole trader business
Business owners who have sought professional advice and have put adequate asset protection measures in place from the outset are able to navigate the insolvency framework with peace of mind”.
To be honest, we don't give a rats about these directors peace of mind. Its subbies peace of mind that is important to us and its virtually non existent, especially when pre insolvency companies are involved.
"Are you aware that if you simply gift an asset or transfer title without proper consideration this could be clawed back in an insolvency event? By having the right strategies in place your assets can be protected from day one".
Make up your own mind, is the Pre Insolvency advice above designed to;
- Save the business so it lives to fight another day to meet its commitments to its creditors OR
- To ensure the Director Is protected and can have peace of mind? The same director who signed personal guarantees, transferred assets, a building, his house, who made division 7A loans from the company to himself or family then forgave those loans, in other words, cleaned out the account
- Defeat the bank if he used the same bank for personal and business?
- To defeat the ATO?
Correct, forget 1, it's 2, 3 and 4 without a doubt.
How can it be legal to put processes in place to protect assets that have been obtained by committing 408C fraud?
Does that mean that if I rob a bank you can restructure my affairs so that if I am caught, I can keep the proceeds and stay out of jail?
To me there is no difference.
In the case of this snake, I assume the advice is typical of what we have seen in the past as there is some evidence to suggest that;
- Assets have been moved
- The office building has been changed from joint names into the wife’s name
- The family home has been sold and vacated, no idea where the money is
- The sale makes it difficult but not impossible to pursue personal guarantees
- The building company has a new sole director, a family member, the previous director has resigned
- A family member is involved, he answers a phone call with a text (I will come to that later)
- They have purchased 2 units
- They have built 2 houses in the last 6 months but have not paid any subcontractors or suppliers since November 2019 so the houses are virtually free
- We would all appreciate a free house please
- Other companies are registered, ready to go when the time is right
- They are potential phoenix companies but at this stage, we are not sure which one of the many will fill that role.
Covid 19 Arrives Right On Time
It’s like a belated Christmas present and "they" take full advantage of it.
The Prime Minister uses a new term, he suggests that you can “hibernate your business”.
Snake takes that and runs with it.
He thinks “great idea, it will buy me another few weeks of invaluable time”.
Snake writes to his valued suppliers and trades
The email is dripping with “I am a great guy, I care about you all, look what I am doing to keep my subbies safe from the dreaded Covid 19”.
There are a couple of things the snake might think are trivial but I don't, considering you used Covid 19 as a bullshit excuse to rip off your sibbies;
- Why use Covid 19 as an excuse? Many subbies and suppliers have not been paid since November 2019.
- You called Covid 19 a disease, it's not a disease, it's a virus.
- You called it an epidemic, it's not an epidemic, it's a pandemic.
All creditors are deeply touched by the line used “Keep Safe during this time”.
The snake has saved all his valued Suppliers and Trades from this deadly disease by shutting down his business for 2 weeks.
It appears the business is now closed permanently according to a text from a family member and a total lack of communication from snake.
What a leader the snake is. How good is this line, “so we can help to stop the spread of this disease.
Give him "Queenslander of the year award for "biggest arsehole" for using a worldwide pandemic as an excuse to steal from subbies. How low can a man get?
Here’s me thinking he's a fool but he has everyone’s money, who is the fool here then? Yeah me.
The snake is referring to them keeping "safe" but he has made no mention or effort to keep all his valued subbies and suppliers financially, mentally or emotionally safe.
What did The Snake Forget?
He has forgotten to pay his “Valued Suppliers and Trades” before he took the PM’s advice and permanently hibernated his business for the sake of not spreading this deadly “disease”.
In fact he has not paid the majority for many months.
He has left them swinging, he also made a mistake, but I am not going to tell him what that mistake is because I am confident it will come back on him at a later date, it can and will be used.
The two weeks of Covid 19 closure has passed, what now?
A creditor tries to call the snake and a family member, no answer.
He sends a text and was lucky enough to receive a rare text reply from a family member who advised that the company had permanently closed its door and there was no money to pay its creditors.
They have closed their doors “due to Covid 19” according to the email on 17th April.
By the 30th April the closure had now become permanent, “there is no money”.
SubbiesUnited wrote to the snake on behalf of his creditors commending him on being the fine upstanding citizen he is in regard to his one man battle against Covid 19 but pointed out he had omitted one very important thing.
He has NOT paid his subcontractors and that should be done immediately.
We suggested he should do that as a matter of urgency. It’s no surprise that we didn’t receive a reply.
They will walk away with millions in assets which were built on the backs of Subbies and Suppliers materials, resources, money, blood sweat and now tears.
This is not one of the biggest builders to do this but the use of Covid 19 makes it one of the lowest of the low.
What happens next;
- They will cancel their own licence, that frees them up from any QBCC scrutiny
- The Monies Owed complaints are not worth the paper they are written on
- A liquidator administrator will be appointed by the builder
- That will drag out while an investigation is under way
- The investigation is not to find where the money went, don’t be so silly, it’s to find out how many subbies can be sued for preferences, that’s where the big money is for the l$qu$dator
- Subbies will be emotional, angry, furious, perplexed, confused that they have been ripped off and the director just walks away like they do with monotonous regularity
- No charges will be laid. There will be no ramifications, not like if you stole a packet of cigarettes from the corner store, if you did that there would be hell to pay and rightfully so, I like my corner store
- Then when the liquidator has enough evidence, he will sue any subbie or supplier who had the hide to ask the builder why he was withholding his claim
- Five months ago the subbie innocently asked the builder by email, “why haven’t I been paid? I will be forced to stop work if the claim is not paid in full by COB on Friday”
- Those emails you sent will be used as proof in court by the liquidator that you knew the builder was trading insolvent
- The L$qu$dator will lawyer up and sue the arse off the subbies.
That will be the coupe de gras. The killer blow that puts the fatally wounded subbie out of his misery.
He will take what little the subbies have left and only then, will the destruction will be complete.
Will anyone sue the arse off the builder?
Hell no, don’t be ridiculous, he will declare bankruptcy.
The assets are in the wife’s name, the Pheonix is in the sons name with dad pulling the strings. It's business as usual.
Meanwhile, “they” take a well earned break the whole family sails off from their waterfront mansion on their 45 foot Riviera to their holiday house on Hamilton Island, port and Island hopping all the way North.
They take their time, after all, they have worked hard, especially lately, it’s been draining on them but they now have that "peace of mind" promised by their advisors who were handsomely paid with subbies money.
Subbies cannot believe this can happen without consequences. I hear it all the time, every time a builder decides to simply not pay them and ceases contact;
- “How can this happen with no consequences?”
- “We cannot let them get away with this.”
- “This is outrageous.”
- “Can’t they be charged.”
- “What is the QBCC doing about this”?
- Surely ASIC will lay charges for insolvent trading”?
- Why don't the Police lay charges of fraud?
Hang on guys, you just saw how it can happen, you just lived through it. It happened to you so now you know.
You know the signs, if you survive, you will know what to look for and how to deal with it next time.
Don’t believe them, don’t wait, get your shit together and do everything by the book and you might avoid the next bullet, but I know from experience it’s not easy even when you have experience with this type of thing. You are too busy trying to make a living to notice the first signs but be vigilant.
Even the best, most organised subbie cannot avoid the flack every time because these bastards are so insidious, well-armed and have the very best of pre-insolvency advice.
Most subbies have been bought up to respect other people’s property, many have had no experience with this type of daylight robbery perpetrated right under the nose of the law, but others are battle hardened warriors and have seen it numerous times before.
INTERMISSION - GO GET YOURSELF A COFFEE
I have got to know one subbie quite well, lets just call him Big Fella”. He has been through this at least 16 times, probably more in the past 3 or 4 years.
The subject of this article, evil snake, dealt with Big Fella but he dodged a bullet this time.
Following is what he said to me when I asked did he work for this company;
“Yep they went elsewhere with their requirements for my trade when they hired the new GM. Stopped talking to us completely. Thankfully, so didn’t get us for anything.
We were doing all their work at one stage...”
I asked him to put together a list of the liquidated companies he has worked for.
Following is the hall of shame he emailed me;
- Garrison Homes was the first, 80k
- AKS Homes 30k
- Bloomer (shitloads)
- Cullen (half a decent house plus the preference claim)
- AMS constructions (a hell of a lot)
- Sunco Homes
- Remcon Const
- Revolution Builders
- G J Gardner Ipswich
- Val Eco Homes
- Fernbrook Homes
- CKP Construction
- Tony Abu Builder
- GDG Projects
- LBD Building Group
- Chets Construction
“Fucking depressing getting that list together ☹”
I bet it is mate, sorry to have been the one to remind you of all that misery and theft.
in fact Big Fella texted me another one on Monday, RGD Group on the Sunshine Coast who he received a “dear business owner” letter from but fortunately he hasn't worked for them for quite a while.
He is a battle-hardened warrior. When he is wounded in the trenches, he gets shipped off to a field hospital behind the battle lines. After they patch him up, he is thrown back into the front-line conflict to do it all again.
16 tours of duty and still standing, he's the one who deserves a medal.
He has also had liquidator hellstorm rained down upon him more than once. How much can a man take?
The most recent onslaught was by a greedy L$qu$dator who has fired a huge preferential payment incendiary bomb out of a Howitzer at him but he is doing his best to defend it, he has dug deep in his foxhole with his helmet on. Many would be in the foetal position but not Big Fella.
He is fighting hard, he has re-joined the front line troops and lives to fight another day.
The Big Fellas of the industry are the survivors but even some of them will buckle at the knees with this latest assault on their life’s work.
Update 9pm 14.05.2020.
Big Fella sent me another one today who has again used Covid 19 as part of his reason to "place his company into administration as soon as practical". but how does the director explain the timeline?
His QBCC license was first suspended on 11/03/2020 so there must have been financial issues before then. The Virus lockdown started on 22/03/2020, 11 days after the License suspension but he says it’s in part "due to the current global financial situation".
Who told him to use Covid 19, whose advice did he seek? Liquidators are rubbing their hands together with glee, they have geared up like never before, they know what is coming, a shitstorm of epic proportions.
How can someone be caught so often?
This industry is a bit like playing Russian Roulette. You just never know which chamber the bullet is in.
You might ask, how can someone be caught so often but when you have a big business with a large number of staff to pay, sometimes you have to take what comes along.
You are careful not to take obvious risks. You do your checks and balances but those checks are not always accurate or up to date. You factor in some damage but you can never factor in the risks this industry presents time after time.
Take the case of Cullen Group.
There was a default judgement awarded to a subbie against Cullen Group from memory for 74k in March 2016 but that wasn’t advertised until October 2016 and by then it was too late.
Like a mug, I signed a contract in August 2016 not knowing about this judgement.
Cullen Group liquidated on 22nd Dec 16, 45 million dollars, not a nice Xmas present for 600 creditors and their families.
It probably affected over 2,000 people, equivalent in size to a country town.
Hopefully the truth will be known when the director is publicly examined if that ever happens. Not that it will help those who lost so much.
By the way, the subbie who was awarded that 74k judgement by the court was later sued for it as a preferential payment, he then liquidated his business. It’s a tough game being a subbie. He does 74k of work, gets a court ordered judgement,
Cullen Group doesn't pay it for months but when they do, it falls within the 6 month relation back period from the date of liquidation, not the date of judgement. How fair is that?
One of their victims of this slithering snake, the subject of this story told me her and hubbie have lost over 1 million dollars in the last 30 years of business. That’s an average of $33,000 per year, that pays off a nice house, unfortunately though, not for the subbie.
I know of another subbie who lost half a million in one liquidation and the L$qu$dator is now trying to sue him for preferences that covers the rest of the massive job he did for that builder.
If the L$qu$dator wins, the subbie will have completed a 3-million-dollar contract for virtually nothing.
In the eyes of the law, that’s fair but it’s not fair to me, it stinks to high heaven as do most of these L$qu$dator$. They have a similar stench to the dead skunks who just decide to keep the money that should be paid to subbies for products and services rendered.
It’s hard to believe it’s possible for this crime of fraud to occur as often as it does so it would be no surprise if a normal person thought this story was a fairy tale but the truth is, it’s not.
The Difference Between This and Every day Run of the Mill Fraud
The difference between this and your everyday normal fraud or theft is that in this case, the builder didn’t actually steal the money, he didn’t take it out of your house or bank or lift it from your wallet.
- He contracted you to do your part, your trade in building lets say, a house
- He used purchase orders to elicit from you products and services
- He implied he would pay
- He contracted to pay you
- He is a properly licensed individual, his company is properly licensed by the industry watch dog the QBCC
- Under his licence conditions he must pay you
- Under the contract he must pay you
- He promised he would pay many times in writing and verbally, mostly verbally
- But he just didn’t pay for those services rendered
- He grabbed all he could grab
- He not just pockets the spoils, he can actually live in it
- You have put a roof over his head and the heads of his family, a yacht on his jetty, European cars in his huge garage and a holiday house on Hamilton Island
There is no code of honour, there is no honour for the snakes of this industry so don't expect it. How could anyone be considered honourable who used a pandemic as an excuse to buy more time to arrange his exit from the industry with your money safely tucked away.
Qld Politicians have failed miserably in fulfilling their promise to make Project Bank Accounts work.
Blue Ribbon 408C Fraud
This is a blue ribbon example of 408C Fraud. It’s time we just refer to this now as 408C Fraud.
Project Bank Accounts for jobs 1 million and Less
There is an urgent need for all these builders whose average projects are under 1 million, to come under the Project Bank Account umbrella. If they did, this would not be happening before our eyes time after time.
Don't listen to the laughingly named "Master Builders", they are not there for subbies, they represent the people they named their organisation after, builders and only builders.
The only hope is that some pencil pushers who are on huge public funded salaries and massive Superannuation contributions, do something about this but it’s happening so often now I cannot see anything being done soon.
If we could get some of these politicians away from their TV grandstanding over Covid 19 to actually do some work, subbies might be in the game with a chance. They are now using it as an excuse for their poor fiscal policies. They can now blame their massive deficits on Covid 19.
Some builders who liquidate now will also use Covid 19 as their excuse for liquidation. No doubt, with a few, it will be the truth but there are others who will hide behind the virus to commit Blue Ribbon 408C fraud.
It’s the life of a subbies with a sad ending, very sad.
We don’t want favours, we don’t want anything for nothing. We just want to be paid on time every time without all the bullshit excuses.
We do not want to risk all by giving huge amounts of unsecured credit to slithering snakes in the hope they pay us.
Banks don’t give unsecured credit. They will lend a % of the value of the property that we build and take security over the property.
Subbies give 100% credit with NO security, on some projects for some subbies that amounts to millions of dollars.
Politicians go to work, if you could call it that, and they are paid on time, never miss, ever, they make sure of that.
Get off your shiny arses and do something to ensure your constituents, the people whose tax pays your exorbitant wages, are paid the same as you are. That’s not a lot for a taxpayer to ask.
This crime is committed daily somewhere in Australia and the criminals all still roam free.
To put it in simple subbie speak, the problem is that no one who has the power to do anything about this Blue Ribbon 408C fraud, gives a flying fuck.
We can't do it all on our own, Join SubbiesUnited and together we can make a difference.