Bankruptcy options

I'm thinking aloud and looking for some ideas that I haven't come up with as yet.

I signed a building contract about 15 months ago that was due to start in may this year, at that time another investment was due to come to a close. Unfortunately that other investment ( a builder/developer) went belly up. Without retelling a sad tale of how not to invest in property I'll move on.

This builder was desperate to sign me up and get the DA into action. I agreed to sign the building contract after confirming all was ok inside it by my solicitor, as well as signing a document that instead of paying the 20k upfront for the DA I would pay the builder prior to starting construction. The builder came up with this brainy idea as I had kept stalling due to no funds to pay to get the DA started. This was totally his idea not mine but I thought a stroke of good fortune.

With the massive loss of cash and finance market the way it is I haven't been able to get a level of funding to build the property. The builder has initiated legal proceedings to recover his $20k immediately.

I was nieve to sign the contract I'm well aware of that so please no comments on the passed events. I put the cart well before the horse on this one.

I'm unable to come up with the $20k immediately + he has said he will then file suit for the lost income of his estimate of $70k from the breach of building contract. Thats 90k + courts costs etc that i don't have.

I have made 3 offers to the builder over the past 3 weeks for repayment of the 20k and all have been rejected. I called him today and he basically said he just wants the house. He won't take any result other than build the duplex ASAP and pay the 20k today or he'll buy the house and clear the mortgage.

I've offered to pay the 20k ASAP and build with him as soon as funds are available, again declined.

I'm not trying to avoid paying this debt I've just been robbed of a huge sum of money and now can't afford to build? I'm in the process of increasing my mortgage to 90% but he has today lodged a caveat on the title and the bank won't release funds when a caveat is on title.

I have been totally open and transparent through this process with the builder and his sales person and he was all ok even offering his brokers services. Infact the last conversation we had was him offering to forward funds and delay payment to get the building moving then 2 hours after that call I get an email of a thinly vailed threat of sell your has to me for 25% less than market value or I'll send you bankrupt.

I have the 1st mortgage on the house + a loan of $250k from the lost investment that takes all equity from the house + some. This means that even selling the house he cannot get a cent unless I build with him.

If I build the duplex at current sales rates he gets all his money, all my loans are paid back and theres money left to do it all again.

As the builder is not offering any form of amicable solution from a mess that he created ( I agreed to it). I'm finding little option other than bankruptcy to sort this out.

Any thoughts?
 
hi
have a chat with your legal
first he has no mortgage so not sure how he will sell the house
he can take legal action but so can alot of people in the world.
youn need to see what you have signed and also how you signed
and thats not for a board
you need a good contractual legal to read thru and give you advice.
also don't talk or accept anything until you get that advice.
if need be pm me and can give you a couple of contract legals in sydney that can give you advice
they are not cheap but they will be able to tell you where you stand
 
Hi Andrew

This is a stressful time for you. Firstly you need to understand that there are some options open to you. You need to get a good solicitor ASAP. I can't recommend any in Sydney, but GR's referals are a good place to start.

Secondly, being sued is a terrible, terrible feeling. The emotions are overwhelming and the tunnel can appear to be very dark. These things happen to the best of people. Hold your family close and know that regardless of the outcome you will be okay. YOU WILL BE OKAY.

This will not stop you pursuing your dreams - just a minor hiccup/lesson sent to make you stronger.

Sounds like this builder is trying all he can to get you to cave in. Stand tall, be strong, and the best of luck to you.

Sunshine
 
hi
also remember that empty vessels make the most noise.
what you need to do is first find out your position and the other side then for me the best form of defense is attack and with that attack you need to make sure you have a few fall back positions.
your biggest problem is the contract and you need to get this assessed and for me fast
not because I think this guy is about to go to court he might but for me you need to find out fast so you know where you are upto.
stress and worry for me is just useless energy spent you need to see thru the smoke and mirrors and what you see as problems and get some good advice and work from there
the legal that you went to first would be the first cab I would go to and work from there
I won't say good luck
because people make there luck good or bad.
 
thanks sunshine and GR.

I've spent the past 4 weeks going to and fro with the solicitor trying to nut out a legal solution. At the end of the day the builder either wants me to do one of the follow things.

1) build the house now
2) pay him Est 100k ( his loss of profit from not building)
3) sell him the house at a massive discount

The builder will not see any reason what so ever. I have had all the documents read and re-read if we went to court the advice is he would get judgement and he would then begin bankruptcy proceedings.

Its a legal building contract and I've breached a condition of the contract by not being able to give him possession of the land to build.

I'm looking today at a finance option that will build the duplex all be it paying a much higher interest rate.

If anyone knows a group or financier that would look at this deal for what it is and fund for construction please let me know.

Basics are

Current Mort - $400k - bank value 2 weeks ago of $500k
Build costs - $507k includes interest
Total costs - $946k including building cost above

Duplex's just in the next street for $642k each

Est sale $1.284mil less agents costs

sale cost less all build + hold costs = !
1,284,000 - 946,000 = 338,000 profit.

even if I pay a risk factor interest rate there is still plenty of money in the deal to secure it.
 
Thanks Nathan, I rang and left a message I chat to him when he calls back.

We'll ladies and gents a certain Mr GR has once again shown his years of experience and forwarded plenty of Ideas to avoid the dreaded "B" that I mentioned earlier.

Many of his idea's are things my solicitor should have offered lets hope they let to a positive outcome? I think a bottle of Johhny Blue is on the way mate.
 
We'll ladies and gents a certain Mr GR has once again shown his years of experience and forwarded plenty of Ideas to avoid the dreaded "B" that I mentioned earlier.

I hope you work it out.
I would never consider the "B" word an option, only a necessity that can't be avoided.
 
Report in Brisbane newspaper this week about a new court action.

Commercial building sold for around $23 mil, buyer could not complete due to credit crunch (GFC). Building subsequently sold for $15.7 mil.

First buyer being sued for the difference.

Ouch!!
Marg
 
Thats good to hear that things are looking up for you.

Generally) Alot of this goes back to the way you structure your assets with your accountant. How many bankrupts have still got a decent life - plenty beacuse they had a good structure in place to protect what was there's first.
 
hi Gerkin
yes you are right just need to be explained a bit different.
yes you do need to structure correct from the start
but that does not mean you throw in the towel.
as I told andrew there is alot of ways of skinning a cat and he may not get out of the quick sand he is in but if he does as has been told to him I think he is already half way out.
I deal with alot of people in andrews position and the issue for me is simple
don't fight the system use it.
now some people will say as was posted in another post that I use systems in a way that they were not designed to be used
well yes I do
we have a legal system not a justice and we have a commercail system thats even less justice so for me use it
and I have told andrew a couple of home truths and I think he will do as told if he doesnt thats his choice.
do I charge no
what I do ask is that if we do get people out of there problems they come along for the ride on a couple of the projects a few people that deal with me
are doing do.
for investors in my groups they get thrown out very quick if they are not interested in investing.
I am the gate keeper and don't get paid for that role.
but people that I assist have the chance to got thru the door its that simple.
the gfc was not alot of people fault but has taken people I like to assist into the quick sand and I take them out.
now in andrew case if I can assist him to get out thats fine for me.
why
they call it karma
and I have been told to do 1 good deed every month and that increases my karma
true
have not got a clue
but what the hell give it a try.
I have also been told that life is not a test drive today is today and if you fail there is no taking the test again
so I think I need karma or anything else that can come on my side.
andrew you are not in as bad a place as you think just use the system and you will be fine
and anyone else in the same place just remember
just because some one wants you to do some thing does not mean you have to do it.
use people ( and I am one of those people that don't mind being used) that can help
and don't worry about the question as the worst thing is that I won't help.
I can't help if you don't ask
you never know I might have to ask
maybe not on a board maybe out at sea
maybe just asking on a site.
ask the question and see if you get the answer.
I hope you all well
 
Report in Brisbane newspaper this week about a new court action.

Commercial building sold for around $23 mil, buyer could not complete due to credit crunch (GFC). Building subsequently sold for $15.7 mil.

First buyer being sued for the difference.

Ouch!!
Marg

Can you point me to an article or the day it appeared in the rag known as Courier Mail? I think I may know the parties involved.:eek:
 
Gross Real,

I was just providing a general comment, not referring to this case, yes your right, i would never throw the towel in nor should Andrew, If you get yourself out of a mess its very satisfying.
 
grossreal; your comments are as usual, uplifting. just a quick note to say thanks for being a gentleman in the oldfashioned noble sense of the word.
by the way, i seriously believe that what you give out is what you get back.
 
hi all
thanks for the kind words the trouble for me is that I have to be sometimes the nice guy and some time the baddy buts thats business I work in teams and build teams and one thing you need to understand very quickly is who will work with who and to do that you need to understand that there is no bad times there is just this time
and this time is what you make of it.
now you can throw in the towel
you can look at what to do next that will get you out.
you can plan an escape
you can even decide to stand and fight
these are all your choice
but it is your choice
and you have to make that choice.
people beleive that they don't need to make that choice and others will do it for them somre people think just because its said or written that its fact and they can't do anything about it
we for me no
its your choice
so make that choice and you will find the road alot easier.
I make choices for today I plan for tomorrow and look what was done yesterday and try not to make the same mistakes again
will I make mistakes
simple answer
yes
but I decide each day to move forward and don't let the past hold me down.
but thats me.
as a certain group says ( and don't need to mention them here)
dream big
and when that dream is met dream bigger
for a man with a dream will never be denied
it just need a bit more time.
add .. as neeeded ( added another e if there's one missing)
 
Buyer- client of mine at a previous law firm I worked at. Top bloke and usually knew his stuff- it just goes to show one bad decision can bring you down. Just hope he didn't go guarantor personally:eek:
 
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