Using credit as an interest free loan to avoid
bankruptcy
Avoiding bankruptcy by borrowing money
Bankruptcy seems to be staring our building contractor
squarely in the face. Over the last 6 months we have watched as he has
become more and more frantic and his requests for advance payment ever
desperate for money loan.
The first sign of his bankruptcy problem manifested itself to us when we
were regaled with a story about how his father had received too much of
a tax refund some 12 months prior and, if he didn't repay it within a
few days, he stood to lose the family home. Could we loan him some
money? Perhaps unadvisedly we did but I reconciled it on three counts:
firstly most builders here ask for advance payment as a matter of course
and we were paying in arrears, secondly at the rate we were going we
would have spent what he had borrowed within a fortnight and thirdly the
cost of changing to another builder (not that we were likely to find
one) could easily have set us back far more than the money loaned.
Within a day or two of having given him a loan of over €10,000 (which is
what he told us it would take to get him back on the straight and
narrow) he was back at us asking for more. Every day he would claim he
was facing imminent bankruptcy and then harangue may wife from 7am to
5pm. He also took to cheating us about the quantities of materials we
were buying through him. The worst was one day's cement order - he tried
to charge us for over 80 bags but he actually delivered under 40.
Because of him being so broke, the work was drawn out with him often
choosing the least efficient way of doing things whenever a choice
existed. He insisted he wasn't insolvent, it was just that he owed
people money when he didn't have any! Unfortunately for him, it got so
bad that we more or less forced him to enter into a fixed price contract
with us for completion. He first said he wanted over €90,000 but we
offered him €30,000 and his nephew, a surveyor, confirmed to him that
our offer was not unfair. We shook hands on €30,000 with a repayment
scale which allowed him to pay off what he owed us.
Almost immediately he was asking for more money because he had not paid
for the gravel we were using. On top of that his workforce (we found
out) had been nearly 3 months without being paid - more victims of
bankruptcy. If we didn't pay they would walk off the site. We said that
was his problem and that he should not have used their wages as an
interest free loan.
The men did eventually walk off the site but they were back a few
minutes later - they were broke too. We agreed to pay a small additional
amount in advance but on the strict condition that it was not a loan to
him but went entirely to them and that we could witness it being paid.
This happened and they returned to work but we still had more problems
to face as a result of him being so insolvent.
Since then we have experienced yet another mass walking off of the site,
more demands for advance payment and ridiculous claims for extras (eg
saying something took 2 men a whole day to accomplish when I watched one
man take his time and finish it in 15 minutes).
As perhaps it is to be expected, it seems we (ourselves and his
workforce) are not the only victims of his insolvent trading. We have
come to realise that just about every building related business in the
area is guilty of giving him an interest-free loan while he charges his
clients cash on the nose for the goods but doesn't pay the supplier.
No-one seems surprised that he is broke - apparently that is
situation-normal.
It is surely only a question of time before he goes into bankruptcy.
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