Latest / The Good Builder Podcast / The Daily Dose #301 | The Grim Reaper Who Tries to Keep You Alive First

Transcript

The Daily Dose #301 | The Grim Reaper Who Tries to Keep You Alive First · The Good Builder Podcast

• Aaron Ng (00:00) Now, before I get into it, a big shout out to the legends at my construct. If you're still managing your jobs, contracts, client comms across text messaging and spreadsheets, there is a better way. My construct is built by Australian builders for Australian builders. And it is the best platform out there as a construction software. Jake and the team are working on some really exciting stuff that we've got to have a sneak peek at. But go and check them out. is myconstruct.com. You can get a 30 day trial and the guys there are absolute legends and they're taking the Australian building industry by storm. So go and check out their platform. They are very, very cool. And thank you once again, MyConstruct for being the proud sponsors of this podcast. Aaron Ng (00:59) Well, good morning and welcome to the Good Builder Podcast. Today's episode is about something that Builders never really want to think about or talk about. I don't know if I wanted to talk about it, to be honest, because I'm not that OFA with it all. But I think I have one of the best gentlemen to talk to about. We just spent about five minutes together and he made me laugh about it. And I shouldn't be laughing about it because it's a pretty serious topic. Yeah. But anyway, it's about what happens when a building business runs into a bit of a financial issue. And and you know, Chris and I were just talking, and I actually said to him, I just gotta get this stat, mate. Like, how many, how many insolvencies are there gonna be in, you know, FY twenty seven or you know, what's the next twelve months look like? And he was like, you know, well, there's about fifteen thousand, sixteen thousand, give it about twenty five percent, there's gonna be about four thousand. I'm like, mate, you are right on the money. I think the official figure's like three thousand eight hundred and ninety-eight, like and you just boom. and that is from the ABS or whatever, like that. But Mate, a pleasure to have you on the couch. Thank you. Yeah, I'd love to know a little bit more about you. But yeah and my therapist says they'd like to know a bit more about me too. I'd like to know a bit more about me. Well why do you do what you do? Yeah, that is a that is the million dollar question, Aaron. ⁓ so what I was saying to Aaron earlier is a lot of the practitioners in this game accidentally fall into the industry. Like no one is lying awake at night going, I can't wait to be a liquidator, that's my dream job. but what ends up happening is the right people fall into it and stay, and they go, This is really cool. And and one of the reasons I think that keeps us in the game, one is we work with really, really good people that's within our own team, but also the the lawyers, accountants, financial. people around us are really, really good people. and they're just as roguey as we are and and you resonate quite well with them. And and you go, Well if you guys are enjoying what you do, we're enjoying what we do and we're kind of enjoying each other's space and company. Well what the hell, let's just keep on doing it. You know, and we're we're making money. Yeah, yeah. Why not? exactly, exactly. Well how how did you fall into it? Tell us a little bit about Chris. Tell us your your history and how you stuck around in the in this space and also talk talk to us about it it's Jersh Sutherland. Yeah. Well done for pronouncing that right actually. I was practicing before, I was like, I forgot because I was so pumped actually talking to you before the pod and we had such a laugh that I forgot to ask you that. And then as you were talking, I'm like, my God, I forgot to actually say where you're from. Jersh Sutherland. Yeah. So tell us a little bit about the company and how you got there. Yeah, yeah. Well, how I fell into the insolvency industry, this is gonna be is gonna be hilarious. But I was broke, drowning in credit card debt and living off Centlink. So and and I was in because what I was really doing prior to that moment in time is I'm chasing a dream too. I've I I thought my dream was to be a Australian stunt man, you know, because I had body of a Greek god coming out of high school, super, super fit. now I've got the body of a Greek wristle. most obvious logical next step is you go liquidation. so that was that that case. But so so then I fall into it. And and this industry, it was a is a huge learning curve. The learning curve in our industry is almost vertical in your first two years. Like really you're taking on so much information. It'd be the same as builders trying to understand your tradecraft is is the knowledge curve is so high and it was challeng like it was it was really exhausting. But enticing and exciting at the same time. And then when about five years you start to connect all the dots as to how it all works. And then I'm like, this is actually resonating with who who I am. Because principally what are we doing? We're solving complex problems at times of supreme stress. Yeah. So if you if you've got a problem solving brain and and you don't mind a bit of chaos and and sort of bring it bringing the calm to the chaos, it's definitely the game for you. And if you like business, like like in our hearts, we're pro business. like that's the irony, I think a lot of people might not connect those dots. Yeah, yeah. it would be fascinating. It would be one of the most h like, talk about relevance to the building industry. It would be a high pressure thing that you do exactly, Chris. Like you come in at the most emotional time in someone's life, I think. one of the outside of death. I think. Yeah, yeah, or getting a knock at the door for the police that you're being arrested. That's a that's a very tough day in the office too. It is, it is, but it's one of the top five, isn't it? What you do. So here's the phone call, Aaron, that we don't get. Okay. Hey, Aaron, you wouldn't believe it. We just made twenty million dollars worth of profit. We have oodles and oodles of cash in the banking, and shareholders are just one eating up all the dividends, you know. That that's not the phone call we get. We get the exact opposite, which is we have negative two million in the bank. We have assets that are completely underfinanced. We want to keep the business. Please help. That's the phone call we get. my god. Yeah. So it's the exact opposite. Well, I think a lot of people don't really know what like insolvency is. Like for the builders out there, for our community could you kind of explain it and maybe not in such scary terms or however you would or or when you should look at it. Yeah, well, my simple ADHD brain just really just gets to the core of the ki critical issues. so so insolvency is a concept and liquidation is a state. And I will explain all that. But the basic basic element is insolvency is the inability to pay your debts as they become due and payable. So you get your OPS bill every month. As long as you can pay that OPTIS bill at the Right on the due date or before, bang, you're solvent. The trap is when the Optus bill comes in and you don't have enough money to pay it on the due date, then the question mark raises, are you insolvent? Now, the same definition that is used for human beings is the same definition used for companies. Right? So So the same the basically the Corporations Act just copy and pasted the definition because they didn't want to think of a new new version. so basically if a person or a company can't pay their bills on time, then something has to happen. And and and we used to have going back to ancient times and I won't bore your listeners too much, but it w it was punitive measures. In other words, we punished people. Yeah for not paying your bills on time. We punished you. You got locked up in jail. You were forced into slavery. But not just you, your wife and your kids got forced into slavery, maximum of three years. So that was kind of nice. Yeah, it was nice that that in the fourth year they set you free. But yeah. or the concept of debtor's prison, which we only abolished, I think, in the eighteenth century. But if if you went down owing money, you got thrown in prison. And and the UK was throwing about ten thousand people in prison every year. Yeah. Holy shit, Chris. So obviously modern days, modern times have emerged and we've gone, well, I don't think that's a good idea to put the primary income earner, put him in incarceration, ironically, until that person pays back their debt. Well, how do you do that to go to jail, mate? You know, just ridiculous. So more modern times, it's more a balance between someone needs a bit of relief because they're under pressure. Yeah. Yeah, yeah. But you've also got to balance that with, but you still owe people money. Yeah. Yeah, you still owe money. So what are we gonna do here to solve that? And and the high-level equation for humans and companies alike is in exchange for you being effectively become debt-free from a bankruptcy process, what you have to give up. Is your realisable assets. So if you if you want this protection from your creditor body and you don't want to go to jail and you want to live again and hit the reset button, well you're gonna have to give up your realisable assets. You know, home. Yeah. A car if it's a super awesome car. Yeah. things like that. wow. But there's certain things that we can't touch. Okay. And I think this is the balance. This is the most fascinating podcast. I love it, mate. Keep going. So what can't you Yeah, good question. So when it comes to the human being, so so this is this would be resonating with say an individual tradee that's doing doing their jobs and all that. What we can't touch, we can't touch your superannuation that sits inside of a regulated and properly managed superfund, right? So in other words, the the the savings that you are generating through your super fund is outside the scope of of evil trustees like ourselves, right? And this is all written in statute. You're you're allowed to keep a car up to the value of about nine thousand odd dollars. And the value that that indexing goes up every two two times in a year. So you're allowed to keep a car. You can keep your bed, you can keep your furniture, a fridge, you know, your microwave. You get to keep all that. Like be because we're not trying to completely debilitate someone from being able to earn an income and get back on the horse again and go and then go again. So so yeah, I think most people without knowing that go, that's it, bankruptcy, they're coming for everything. No, that's what I thought. Yeah. I I thought the same thing. And and you know, what I said as you walked in the room we had a bit of a laugh. I was a bit scared of this podcast because I'm like, where's it gonna go? Like and so when you go into a builder, what do you actually do when a company's in trouble? Like what is the process of sort of going through things? Yeah. It's probably a huge A lot to talk about, but maybe we'll we'll keep it high level. We'll keep it high level and simple. So so a builder has a has a project management schedule that they would they would follow. Like a almost like a Gantt chart. You know, you gotta start with getting your site base flat and then you gotta dig the footings, then you gotta put the the slab in, you know, all that. So very similar process for liquidation. first thing we do is we notify ASIC that a liquidator has been appointed. So in other words, we've got to we've got to put a flag up on the company to say, Someone is now controlling this company other than the directors. Right. And and that has to be a public flag. Yep. Because when people are doing business with entities, they need to know who are they doing doing business with. Yep. So first thing we notice for that. Second thing we do is we freeze all the bank accounts. So that could that could come sometimes as a bit of a shock to some people. Yeah, yeah, I'm sure it would. So my goodness. Because the the the one of the key duties that we have, and this is the because you've got to think about the creditor body, right? Yeah. is we have to go and round up all of the company's assets and usually really, really quickly. Yeah, yeah. So so that's why you often see liquidators moving with such urgency right at the beginning. Yeah. Because if if you've a builder and you've got multiple sites and the builder owns multiple plant and machinery on those sites, we've got to we've got to round those things up real quick. wow. Yeah. So because because what happens to mobile plant equipment sometimes? It goes missing. Yeah, yeah, yeah. You know. And and it was a funny story, but when I think it was when I think it was Pro Build that might have fallen over, they they they were 80% complete on the building in Brisbane City. Yeah. We we we we heard the little bluebirds were saying it's going down today, right? And then we just just surreptitiously happened to be around Creek Street, Eagle Street there, and we just watched this swarm of tradies hit the site. And a swarm of tradies grab all their tools and the equipment and just start moving to the point where they weren't even waiting for transport to come and pick it up. They were, they were moving their plant equipment down Queen Street, Eagle Street, Adelaide Street just to get it off site as quickly as humanly possible. So yeah, it was just hilarious. As an outsider looking in, watching that unfold. Yeah. my goodness. And I think some some tradies got so upset. And rightly so, because they're obviously unpaid and and they may have had promises to keep going for payment. Right. They went, well, you know what, I've only half installed that air conditioning unit. Out she comes. I've only half installed all that copper wiring. And that happens a lot, doesn't it? Unfortunately, yeah. Holy crap, Chris. So where do you This might be a stupid question, but you and you did explain it. If you don't have the cash at the due date to pay the invoice, you're pretty much trading insolvent. Or you you become insolvent. Yeah, yeah. You become insolvent. Yeah, yeah. So so look, I probably should say this. Like what about the builders? Like, sorry to Yeah You know what I mean? Because like cash flow is such a big thing. And I'm sure this happens a lot out there. Yeah. I've seen it happen. I should probably shouldn't say that, but I've seen it happen where they don't have the cash, can't pay your bills, but it's coming. Yeah, that that happens a lot. And and I think I think the what's the core reason for that is as much as we would love the building industry to be this wonderful you know, the customer always pays their money to the builder, the builder then immediately pays their money to the subbies, and you've got this beautiful cycle of cash happening. Most of the industry is run on credit. Yeah. So this is the challenge. So so the builder is the conduit, right? So what I mean by that is the sort of the the the person that connects the dots between your customer here and then your subbies over here. So they're the conduit, right? And a builder's margins are are just very tight, right? And and some are less than two digits. Talking Hutchies, they're they're they're even even tighter than that. Wow. So so so and and not only that, the the cash flow payment cycles don't line up. And what I mean by that is you're only getting your money from your customer once every 120 days, once every ninety days. Yeah. But you you're paying the subbies every seven days, every fourteen. So in other words, you've got eight, eight sort of payment cycles out of your business for every one that comes in. So that that's a r that's a hard thing to manage. Yeah. so yeah. Now who makes the determination ultimately on whether a company or a person is insolvent is generally the court, right? So in other words, and this is only if something is pushed all the way to trial, right? Okay. The court has to make a determination. The the court's gonna call in experts to deliver, well, let's hear what expert A says about insolvency. Let's hear what expert B says on solvency. And then that one judge has to make a call. Just go, well, I think whether they're insolvent or not. Yeah. So so that that's the challenge. Now, as reasonable experts, we have a really good understanding of the You're an expert, mate. You know your stuff. I love it. And I love, you know what? Sorry to cut you, but thank you so much for the way you're explaining this for our community too. You're doing it in such a fun way. Thank you. Number one, but such a clear, logical way and explaining it so well because we've actually been asked multiple times to find someone in this area and and you came to our door. So thank you, Chris. But yeah, keep going, mate. No, it's I love how you're doing it. Keep yeah. It's just fascinating, man. But I found it really fascinating. I was still learning. This is the irony. So, you know, I'm more than two decades in this game and it and it's piqued my interest. It's kept my interest. And even even today, still learning, still learning. Because there's always new U beauty things coming out and and And also we were talking earlier that you you found it quite interesting that we're not lawyers. Yeah. We should be we should have a law degree ultimately. Yeah. Because we're actually professionally trained accountants first that live inside the legislation. So by default, we kind of earn a law degree, but the hard way, just like a builder earns their business degree the hard way. Yes. You know. Yeah. Builders magnificent at project managing building something. Love it. You know, stick to that's your trade craft, stick to it. But they have to then learn the second skill set of running a business. So very similar kind of mind. So you're an accountant that's had to learn the entire law around this and this law seems in a very peculiar area. yeah, and it seems kind of like there's a lot to it, isn't there? Yeah, it it's i there is. What are the most complex bits or or what should Or or what pieces of advice would you give a builder if they're thinking they're going down this road of having to wind things up? Like how how what are the first signals or what would you do? Yeah, I say to all business owners. So this this this is this is everybody across the board. So not just the building guys. But the building guys would be really, really good to to I say you should always have a good accountant and a good lawyer on speed dial. In other words, you should have a really good relationship because they're trusted advisors. Those two Industries want to see the best for their clients and and they're probably the people that have your back. That like I mean a lawyer has to have your back at law. You know, like if they are your lawyer and and obviously you gotta keep paying them, but they should they'll have you back. So you should always be able to have them on speed dials. So because problems are either a financial or a legal problem. Yeah. And and 'cause that's where we target our marketing is to those two people because we get the the the builder or the director that comes to us, they've either got a financial problem or they've got a legal problem. Yeah. You know, and and that's why those two channels are really, really important to us. w and that's how they end up in court and that sort of thing happens. Yeah. Generally. W most of us in our game, see there's there's two ways you can go and meet the Grim Reaper, right? You can either do it voluntarily, which is by yourself, and and and it's usually because of a referral in. So someone goes, look, listen A Grim Reaper has to come in one way or another. You can either pick your guy or alternatively the court will pick it for you. That's the choice. And of course, that this is where the lawyers and the accountants come in because those relationships will say, Hey Aaron, if you have to pick a liqu if you have to pick your Grim Reaper, the here's three that we recommend, but we think on balance maybe this is this is the guy for you type. Mentality. And so we would would build a connection and and I want to understand your business. You need to understand my processes and what we're gonna do. And then you go, I think I feel comfortable having my head cut off by this guy. He's he's quite nice. and and that's how we end up in the job. I'd choose you, mate. Yeah. Chris, like the way you explain it and make it a little bit. and and you know, what are you saying? You you talk about, you know, you you work not just in construction, you work across a range of industries. Yeah. What do you see in terms of insolvencies across the different industries? Where does construction sort of sit? Construction historic so so ASIC, our wonderful regulator, has only been keeping track of data since nineteen ninety nine. wow, really? Yeah, that's it. my god. And the reason is is because well the reason is, and this is a little journey down h history lane, right? Is prior to that, each state had their own laws for managing a company. So Queensland had is it had its own laws, New South Wales had its own laws. wow. So then when it where the challenge was, which state was that company registered in? Because that's the law you had to apply to that company. So then the the government, and I think rightly so, said this is ridiculous because we're in Queensland and we get a we get a company from Victoria. What I've got to now turn up in Victoria all the way from Queensland, I've got to apply the Victorian laws. The government just said, right, this is stupid. And we're gonna nationalize companies. So so the all the rules now apply to the Commonwealth of Australia. So that's brilliant. It means I can be in Brisbane and I can actually handle a Tasmanian company and a Western Australian company. Yeah. the nuance then becomes everyone's geography is slightly nuanced and there's slightly different I guess Market saturation in certain industries. As an example, Western Australia is all your mining companies are there. Mining services are based there. So going back to your question of where do we where do we see it all playing out, construction will always be one or two of the largest industries that fail year on year on years since 1999. Wow. So it's either one or two. At the moment, it is the leading industry, for instance, has been for the last couple of years. Yeah. So That's not unusual to us. Yeah, yeah, yeah. That's not unusual. and I think when when you think about it, right? You've got your tier one builders and and and there's only a handful of them. Yeah. But as you start to go into well, each individual trading now has got the advice that I want to be a company because that's what my accountant told me to do. Well, now you've got all these ha thousands of companies b starting up. Yeah. So so so then Really, what is that company in a tradey format is really it's a sold trader, just disguised as a company. Yeah. And that's probably why the numbers are you know quite yeah. But similarly, if they weren't operating if they weren't operating as a company, they'd be operating in their human form. in which case you'd you'd expect to see bankruptcy numbers rising. Yes. Because we had a builder on here the other day, he's a custom builder, and he was really proud of the fact he said to me, his first line was I'm really proud of the fact. One in 25 builders fail before 10 years, and I'm one that hasn't. And that is how he was gauging his success. And I was like, that's scary. And that's why, of course, we have you on, Chris. because it was just like, what the hell? well, liquidation. So there's liquidation. What other sort of methods of or or what else could you look at before that, like restructuring and different things like that? How how do you work with? companies in in that way or advice around that. That that's a good question. And probably before answering it, then you'll probably notice a pattern Aaron that I generally answer my own questions. I love it. I'm not But I love the prompting. Because you explain it much better than I do. Like I said before the podcast and I'm not embarrassed to say this to the community. I I Chris walked in and I said to him, Man, you know, I'm I'm not Little guy and I I haven't been insolvent, praise the Lord. But if I ever am, Chris, you're my man for sure. So you can re-watch his podcast and I'll be having him back hopefully not. But mate, yeah, I I love how you answer own questions. But yeah, what other sort of things can you look at? Or how does it all work? The two highest the two highest elements or the purpose is probably the better, the better way. The purpose for why our industry exists is twofold. One is To preserve value in business and and maximize the chance of that business continuing in operation. That that's that's your primary purpose. That's why you exist. Yeah, correct, correct. And this is why we're pro business and this is why I love this game, is because people, businesses are coming to me in distress. My first thinking is how do I keep this business alive? With with the powers that I've got and all the wonderful strings I can pull, what what could I do? So So is that the first thing you look at, Chris? Always, always. I I say this to even more my lawyer friends and accounting friends is you don't be afraid to call me into a meeting because my first principle thinking is how do I keep this thing alive? And we've got some pretty cool tools to be able to do it. I've saved a lot of businesses in my time. ASX listed ones, small, small trade ones, you know, like we we we we cover that spectrum. Mate, that's so cool. That's the principal objection objective of why we exist. The second element is. is if that can't be achieved, like if the company is so heinously rooted in the butt, right? the PG audience. No, we don't find no like then our job. Yeah, I want that rooted in the butt guy. then the the the the second element is close it all down as efficiently and fast as possible and recycle those assets from a failed company and get them in the hands of another better company that might use those same assets and do a better job with it. So that they're your two reasons. Yeah. And you know what? Like thank you for lifting the hood on all of this because you wouldn't know this unless you've been in the process of insolvency or anything like that. Do you know what I mean? Like yeah. And as I said, many of our audience, our builders, I never like to think about So don't look at it. I don't like chat GPT at night and dig go down rabbit holes about Yeah, no one ever wants them to come ask or even want to meet us, to be honest. Yeah, well mate, I'm gonna actually say I think they do after this podcast. You're a wonderful bloke. And I think you explained it really well. And I love the way you actually look at you know, I I didn't realise, man, like that blew me away. You saying like the first thing I do is like, how do I keep the pulse in this thing? How do I keep it going? If you can't, then you go, you know. That's right. That that's right. And and shit, you know, after what, two thousand, two thousand people have c come and gone. Actually, that's just two thousand of matters that I've worked on. That that ignores the people where and I've sat down with business I've turned business away. And this might be really hard to get your head around, which is which is the director comes to me, asking questions, asking questions, because you gotta ask a lot of questions because you need to drill down into what the real problem is. You might think the problem is problem A, but after I work through my series of Some call it an interrogation, some call it just general inquiry. But we've I then get to the point that go, actually, your problem is not A, your problem is B. And and I and I'll give you a very quick classic example is an NDIS operator came to me, and NDIS is in the gun sites at the moment for rogue operators. But this guy came to me and he goes, Hey man, I'm running all this business. I'm really worried about the tax man in this scenario. So I carp keep asking questions, asking questions, and then I'm realizing I don't think the tax man's your problem. Your biggest problem is that you have borrowed money from a third-tier lender that's charging you nearly 80% interest on the money that you've just borrowed. To put it in another way, the lender doubles their money on you l every nine months or something, something crazy like this. So I said that's your major problem. You the it's it's the lender, that's that third tier lender you need to get rid of. You need to beg, borrow, steal, and get rid of that. We can manage the tax man. The tax man is very principal, process driven animal. And as long as we're we're following the process, we can we can manage that. But that t third tier lender that's got you by the nuts for eighty percent interest rates, that's the guy that's really gonna Yeah, jam you hard. Yeah. And not only that. Yeah, yeah. And not only that, I'm pretty sure you signed a personal guarantee for that. You know? And I'm just like, wow. Yeah. So so again. That is really fascinating. Do you work with it? The the director is looking, the the tax man's a problem. Like, nah, that's not a problem. This is your this is your problem. Tax man, we can we we know how to handle the tax man. But the these rogue financiers, not saying all financiers are rogue, but these guys are charged that the the guys charging that amount. That that That's what would kill him financially. Wow. Yeah. So it's almost like you are a business consultant too. You know, going through and and picking the things that are really bad for them to to keep going. It's funny so that's interesting. That's I I remember I had this dream, Aaron, where when the late Kerry Packer was still alive, right? And I thought, well, Well, obviously being an Australian stuntman is not going to work for me. there's no doesn't seem to be many opportunities for circus clowns either. So I'll have to give those two dreams up. I I said in my head, I went, I could go to Kerry Packer and I go, I can see some of your companies aren't performing well. you're gonna pay me no money, but I'm gonna go in there, re engineer those companies, get them back into profit. But the flip side is you're gonna give me a truckload of shares and maybe some horrendous bonus at the end. And I reckon a guy like a Kerry Packer would probably go, I like that. I'd I'd take that deal because there's no risk to him in having someone go and re engineer those companies. So anyway, and I think no I think that was the precipice for why I thought, no, actually I like what it is that we do because we can actually save businesses, you know. that's the beautiful part. This is amazing, you know, like you said it before that you know, some good lawyers and accountants invite you into meetings. I would never have bought to invite, you know, a liquidation expert to a meeting. But I'm second guessing myself now. Like I'm I'm like, you know, if you're on the precipice of something that you think isn't going the right way. And I don't, I'm sorry if I try not put words in your mouth, but at Josh Sutherland, do you provide that kind of service if a business calls you up and says, hey, look, you know, don't really know what's going on. I feel like I'm going to go down. Would you come and have a look? Is that a service that you guys provide for a fee? Yeah, we often so yes, yes and no. W I also give away a lot of my time in up front because what I'm really trying to work out from you or or the the builder, right, is is what is the actual landscape that you're operating in and what is the real problem? So I'm trying to figure that out. At the same time, the builder is then trying to work out well, what are my options? Am I totally fucked financially? so there's a there's a cross exchange of information. Where the real value add is for us is when we're putting together what we think is the plan and then we go boots on ground. Because as soon as we take over or we're now helping the director through this, that's when you're gonna see our true value coming in because you're gonna watch how we handle your suppliers, we're gonna watch how we handle the ATO, you're gonna watch us how we report, how we conduct meetings of creditors. And you can sort and you'll get a small taste for the power that comes behind us, you know, which no one no one again, no one's, hey, let's see what powers the Liquidator has, you know. you don't but as and support. Was it Spider Man? With great power comes great responsibility. So so we deploy the powers that we have, but for the two objectives keep business alive or or bring an orderly winding up to it. You know, so but yeah, to to to go back to the consulting element. I love it. I always I always laugh because I say to people, if if if there is an element of distress, if there's something that's untoward in your business and it just doesn't feel right, like there's some like there's just some element here it just doesn't feel right, wouldn't it make sense to bring someone in that's be seen this a hundred, a thousand times, two thousand times, plus plus, plus, plus, plus. Because we see so many common mistakes made by directors running businesses, it's almost like I can almost predict it and go, Yeah, well, here's what's going to happen if you don't do A, B, C, D, X, Y, and Z is about to happen. And I reckon you go at about 18 months. And after 2,000 plus businesses that you've done plus the ones that you freely consult for, as you said, I'm sure you've seen it all. Yeah. So why not why not call someone in that that's seen the worst? Yeah. You know, we we live in that game. We live in this is the worst that business has to offer. Yeah, good operators will never meet us. Good operators will will absolutely crush it out there because they're really smart operators. Yeah. yeah. Wow. No, I I think it's as I said, I think it's fascinating, Chris, the way you work with mole. As I said, I didn't know any of this. It's really opened my eyes to everything that you do. And then the, you know, the the business side of things and how you, you know, pick problems. The example that you spoke about, like, I don't know, it's it's almost like I see a lot of builders out there, they struggle with cash flow all the time. As I said, I was talking to you about Avondale Homes that I was part of and and we did at times and I remember that we used to have to have four million in the bank account over Christmas because you don't get paid, you're not building. We take our six weeks off or whatever we do in the construction industry and go four wheel driving somewhere. And then you you you cash flow and it comes pretty tight. Yeah, so now you gotta raise that four million and if if if D December and January are typically the worst two months for any business. Like look, same same in our profession as well. wow. So what does that mean? If if you if you think about it this way, if those two months are unproductive months, then you have ten months to get your shit sorted in readiness for those two months. So now if we need to bank four million or have four million in in cash, wow, you've gotta make February to November and you've gotta run that you gotta run that hard. Yeah. You know, you gotta really run that hard. but yeah, it's it's wild. But yeah, going back to one of your questions, which I'm just making up in my head as we speak. The biggest fear that any director has when coming to meet with us, and and you probably felt my presence as I walked in. I did, mate. I did I don't know what it is, but I'm there's something about this guy. This is the biggest fear is we are so one dimensional in our advice that we're just simply gonna say, Aaron. Just hand me the keys, mate. You know, like that's that's that's the biggest fear. So it that's why people don't want to meet with us because they say, Why would I want to go and meet with a guy that's literally just gonna say, I think you fucked, give me your keys, you know? That's it. But but what I think we're trying to educate and get it out there is our first thinking is, well, how do we keep your business alive? How do we save it? What tools can we use? Because there's some cool tools out there. to keep business live. And if it just can't be done, then we're gonna give you a game plan for how we're gonna basically exit that company f and and deal with the asset side of the equation. Wow. Well with everything that's going on in the country right now, and I don't want to make you Nostradamus or anything, but you sound like you you know a bloody lot. What do you think's gonna come in the next twelve months for Australian businesses? Do you think more insolvencies? I think we hi I think we hit the record in construction, didn't we, last year financial year the record in construction insolvency. If if we use use this baseline, so so the after the global financial crisis is two thousand eight, it sort of is announced and then we we noticed in our game there was a real uptick obviously in insolvencies. I think that goes hand in hand. As soon as you stop the cash flow, that's it. It's all over. But it gave us an nearly an eight year runoff of activity that was above the 20 year average. So let's just say the average over 20 years is just shy of 10,000 companies year on year will fall over, right? That's that's that's the 20-year average. GFC, we were hitting 12,000, you know, that 2025, we go 15,000. Yeah. In in so so obviously that was the kind of the tail end of of the covet fallout. I still think we're experiencing the fallout from COVID from business owners. That are hanging on by the skin of their teeth, the grit in their nails, still hanging on. Yeah. I agree. But every time there's a shake up in the economy, we know that we're not going to feel the impact immediately in the insolvency game today. Where it's going to start hitting is it about 12, 18 months from now. Then we're going to notice a a real uptick. So to give you COVID. Is an ab is an anomaly, right? And the so, for those that really lie awake at night thinking about the poor liquidator during COVID, what happened is is insolvencies dropped fifty percent below the twenty year average for three years. So it just went bang, just went went below. It was late twenty twenty four we started to notice now it's Like our time's coming now and we're all like, Yeah, this is great, you know, we're finally get that waterfront mansion and the boat and you know so all that sort of stuff. yeah, it's from twenty twenty four, it's just gone like like this. I which is the fallout from COVID. Which is the fallout from from COVID. The shakeup from fuel prices, I think it's already having an immediate impact in the freighting industry. Which Yeah, yeah. This is the bluebird noises that we're we're hearing, all the chatter within our network. Is freight is obviously the most obvious one that's going to be impacted. But again, same for building, same for any other industry, good operators have all have already worked out how they're gonna hedge their situation. And they probably even hedged it long before all the craziness started to begin. Whereas, whereas, if you're not really a good operator, you're gonna be reactionary to the circumstance that's right in front of your face. Yeah. The way good operators need to operate is you need to sort of think about three, four, five steps ahead. You you gotta play what we like to say sometimes in the profession, three-dimensional chess. Like you're not just playing chess as you see, you gotta play three dimensional chess sometimes. So you gotta you gotta have that real vision and try and predict what's coming and take action. Yeah, anyway. Well no, no, no, no, not anyway. Your advice is is wild, man. This is one of the coolest podcasts I've ever done. did not expect it because I scared shitless as you walk through the door. Give me your keys, Eric. Yeah, do here we go. No, but like really I I and I'm you know, I obviously haven't been through it and you know no one likes to talk about it. I I think it's one of the first in this industry that we're talking about liquidation and and stuff like that. So Chris mate, it it's amazing. But like for the builders that you know for the builders that lie awake at night thinking about this thing, what would you what would you tell them to do Who are their best? You kind of alluded to it earlier in the podcast, but who are their best allies? What should they do so they can set the right foundations and they never get to meet the Grim Grim Reaper? The Grim Reaper. I've been called Smiling Assassin. I think that's one of my favorite Yeah. Toe cutters, corporate undertaker, but Smiling Assassin's my favorite. now, why is a builder stressed out at night time. Why is a builder lying there awake? Is because that that that's your body kind of signalling that we've got a problem. And typically the problem is that is a lack of clarity. In other words, I don't know what to do and I don't know where where to turn to, right? So it's a lack of clarity. So I've always prided myself that even if I met someone for the first time, like a director, is coming to me to have that chat for the first time. They walk away with crystal clear clarity. In other words, I'm going to tell you what the the horrible past look like. I'm going to tell you what it's going to mean to try and do a restructure. Because it's not, not it's simple, but it's not easy if is the way to do it. But at least the director's walking away going, well, I now know what crystal clear, what my options are. Once you've got clarity, then your brain switches into problem solving mode. See, at the moment when you're lying awake worried, you don't know what problem you're trying to solve. Yeah. Because you don't like you can't see the forest or the trees. You know, you're just clouds everywhere. So our job is to remove the clouds, make it very crystal clear. And you might not like what we're about to tell you, right? I think that's the reality. But but you've got clarity. You absolutely have that crystal clear clarity. Once you've got the clarity, then your brain switches into problem solving mode, the worry disappears, because now you're going into action. Yeah. And and I think, you know, builders and and developers and and tradies and and directors, once you go into action and you've got a very crystal clear path, wow, that's that's a whole new power that comes with that. Because there's a whole new energy that comes with that. Yeah. absolutely. Absolutely. And you know where you you're heading. Whether it be good or bad. You know where you're heading and you know what you need to do and obviously you guys help along the way. Yeah. And I mean, we do explore things like like Yeah, we talk about my my business partners refer to our job sometimes as asset recyclers, which is we take the assets from a underperforming business and we recycle that and get it to a business that does perform. So often we, your business, whatever that will be in, there's someone that actually could run that business that you're in probably a little bit better, probably got better systems, staffing resources. So, so w would it make sense that? Maybe these guys here acquire your business over here and maybe scoop you up as part of the process, you know, it you might not like that. But that might be a a great outcome for the scenario and you're you're getting the money back to credit to the best of your ability. Yeah. You know, but that's an option that you explore. Well, quickly on bankruptcy. What does that actually mean? So if you go bankrupt, yeah. What does that mean for you? How many years or Period, you talked about what you can own. What does that sort of look like? Bankruptcy? Yeah. So bankruptcy, and this is the the this is tr critical. Bankruptcy applies to human beings in Australia. Okay. Liquidation applies to companies. Yeah. Where where where everyone gets confused is we hear the American news sometimes and they're like, Yeah, you know, American Airlines in chapter eleven bankruptcy. Yeah. And so everyone just assumes bankruptcy applies to both. In Australia. So there's a little bit of confusion there, but that's that's just me being a bit cadandy. You can only put yourself personally backrupt. Bank bankruptcy is a is relates to a human being. Okay. Right? And and it can be triggered voluntarily or involuntarily. So voluntarily means if you realise that you're in humongous financial trouble and you can't get your way out, then you appoint your own trustee or at least a trustee to be that person for you, to manage it for at least three years. as the process or alternatively if you don't pay your bills, let's say the tax man as an example, at some point in time the tax man is going to take a legal process, and that legal process, if you if you take no positive steps here, will will end up in bankruptcy, but by a court order where the ATO picks your trustee for you. wow. So voluntarily, involuntarily. So you know we we we always say to people, I think It's expected of people in business is that if you are in trouble, go and get professional help. Yeah. Like don't try and too. We see it so many times. Directors trying to solve their own problems and good. That's very admirable and very, you know. I'm just gonna weather this storm by myself. I'm gonna carry the load of the family and the business and the staff all over my shoulders. Totally noble, very and I get it. That's that's just what dudes do sometimes, you know. Special construction. Yeah, but Get professional advice. Get people that have seen your scenario a hundred thousand times, pick our brains, and and and either accept the advice or don't. That's up to you. But at least go and make that phone call. At least go and have that meeting. Yeah, absolutely. You know. my as I said, Chris, like talking to you today and the clarity that you've brang to what sort of insolvency is and liquidation and bankruptcy as well on that personal front. And then ways you go about it and how you work with people. And I think even it gave me a sense of relief and for our community as well. Yeah. When you said, you know, the first thing you do is you come in and you're like, how do I work with this business to keep them going? Whether you're asset recycling, as you said, or anything like that. I think the construction industry, or at least our community, is gonna be a bit because I know there'd be guys and girls out there that would be having some hard times right now and going to you know, what do I do? Yeah. Having you on here I think just breaks that you know, fear. I vouch for you, mate. Like a anyone who wants to chat, you know, as I said, I I you said previously that a lot of the time that it's usually accounts or lawyers that that sort of give you the business or recommend you or however it sort of works. But if any builders out there have accounts and lawyers, tell Work with Josh Sutherland and Chris there and and say that's who you want to work with if shit goes south. but yeah, you you know what I mean, Chris, like it's it's really really been very insightful in and really I know I'm gonna have you I would love to have you back on because I think this can go a lot deeper. I'd like to talk about some case studies potentially if you can, not name names, but you know, I I think this podcast just really will settle a few people in terms of hey, you know, it We're the biggest industry that goes through it, people go through it, it's a part of some people's lives. Yep, feels like you're calling in the Grim Reaper. But like you said, if you have the smiling Grim Reaper in your corner, and their first point of call is to actually try and make you stay afloat. Well, I I'll I'll if if if if this is our end, Aaron, I'm gonna we'll finish with a story because I think this is good. But but on the subject of bankruptcy, you can get out of bankruptcy. So just because you've gone into it doesn't mean you can't get out of it. And and the the legislation is set up that you've got three ways to get out of it. And I got no idea because as I said, I don't Google this stuff. Exactly. And but these but these are the questions that need to be asked or or the questions that need to be asked by by a person that if you didn't know, you'd be like, Well what you mean I can get out of it. So three ways you can get out of bankruptcy. And I'm gonna use the example of Alan Bond. If if any if any of you listeners remember the great businessman Alan Bond, yeah. I'm gonna get some of my facts a little bit skew if but do it all the Yeah, yeah, yeah. What what I'm really worried about is my colleagues just going, I think he's got he got that data wrong. but fuck Now so so three ways to get out of it. One is one is you go to court and you say, Hey, I should never have been bankrupted in the first place. In other words, in other words, someone's someone's gone, I don't like Aaron, he he owes me, you know, twenty grand. I'm just gonna murder, death, kill Aaron financially. And so an order comes in that you should be a bankrupt. I become the trustee, hypothetically. You can march off to court and go, I shouldn't have been bankrupt in the first place. And the reason being is because yes, I went down on twenty thousand dollar debt, but I've got five million dollars in assets over here that I think I can I can. grab a little bit of equity and and discharge that. And this actually legitimately happened to one of my guys. I became a trustee of a guy that went down on maybe a $12,000 debt. Like it wasn't that much. But the guy was just so ignoring every notice known to man. That was a legal notice and here's your warning and here in comes the court proceedings. In comes the second round of court proceedings. Just ignores it all. Now the ultimate End step is, well buggy you, if you're not gonna pay attention to any of our legal notices, bang, bankruptcy. And the and the court is obliged, having having had all those processes followed, you gotta give a bankruptcy order. So I become this guy's trustee. I then say to the guy, hey mate, could you you've got to fill out a form here which tells us all about your assets and liabilities and it's a standard form. If you don't fill it in, you go to jail type stuff, right? Wow. And I'm I'm reading the document, I'm like, this guy has eight million dollars in real estate in Victoria alone. And for twelve thousand dollars he's gonna go to jail. Yeah, and for twelve thousand yeah, that's right, twelve thousand and we're like, what the hell? So anyway, he finally gets lawyers involved for him and they say to us, Hey, I don't think this order should have been made. We're gonna go march up to the courthouse and we're gonna say, I think we need to let this guy go, 'cause he's worth eight million dollars net assets and he's gone down on a twelve thousand dollar debt. So that's an example of you can go to court and have the court Undo it, right? So that that's your first way out. I love it. The second way out is after bankruptcy, magically money comes in that pays everyone out in full. So as an example, and this is probably appropriate for our tradies and builders out there. I think so. Imagine you go bankrupt and you have no assets and a truckload of debt. Yep. And you go and buy that lottery ticket, and I'm not encouraging gambling or or or lottery, right? But you magically go and buy that lottery ticket and suddenly you're $10 million cash as a result of the lottery win. That $10 million will go and pay out your creditor body, and then you keep the rest of the money. And the law will say, Well, since you've paid everybody out, at law, you were never bankrupted in the first place. So that the the Latin phrase is void abonitio. For those of you playing at home. So void ab initio meaning it never occurred in the first place. So technically at law, you can, if you went down and then a lottery win pays out all your creditors, you can walk around the streets and go, I was never a bankrupt in the first place. wow. That's your second way out of it. What's the third? The third way is you do a deal with your creditors after the fact. So hypothetically, you owe a million dollars to your creditor botting. Yeah. And all your friends and family rally up a little change drawer and and they're tipping out of the piggy bank and your kids are throwing in there $2 and going, hey, dad, let's try and get you out. And let's just hypothetically say you came up with 200 grand because of that million dollar debt you had, and you managed to rally up 200 grand as an example. We would then go to your creditor body and say, Hey, there's a deal here, guys. They're the the family have rallied together 200 grand. We know it's not gonna get you all your money, but it's gonna get you twenty percent of your money. Would you accept this two hundred grand and release our friend from bankruptcy? And if creditors at the meeting go, Yep, we're we're in favour of that, boom, done, you're out. Wow. I'll tell you what, it's almost like not that you wanna get into that situation, but like you have so much knowledge that business people should just have. Yeah, it'd be nice if you just download it. But you can't, and I know like you said, it's like You know, you've been through the fire. You know, you you can't get that unless you've been through the fire experience. And and mate, that's why we've loved John here, Chris. That's why we we like I'm gonna have you back on and you're so entertaining too, mate, talking about this stuff. But like the other thing is, like we want good people for our community out there. I think you know, we've got about t 35,000 builders out there. There must be someone out there that might need a bit of help and we and after talking to you, mate, highly recommend you. So we'll put all the links and everything below. But I've got one more question for you. And you're not from the building industry. No. So this is gonna be super interesting. And I never asked it to people outside of the building industry, but I think you're the right guy because you're cool and you can talk well. Thank you, Aaron. Mate, you know we're called the good builder. What do you reckon makes a good builder? That is a great question, Aaron. having seen a lot of people do it wrong, I would say two two principal things. One is y the builders have to know your numbers. Like you gotta know your numbers. You gotta understand where is their profit and fat in this project and and your cash flow and your and just your where where are you losing the sense in the project? Where are you losing and hemorrhaging money? You gotta know your numbers. So because that that's what distinguishes really people that come to see us and people that don't. It's true. The the good operators will never see us because they know their numbers. So know your numbers and two, just continually improve your systems for producing your product. So get better with technology, get better with just remove paper from the equation, just keep it digital. You know, just become super, super efficient in your operations. Like if you can just become super efficient, know your numbers, we never have to meet except over a beer. I'll tell you what, Chris, it's really interesting your answer because so for everyone out there, I didn't send that c question to Chris at all. He didn't know I was going to I haven't prepared for any of this today. No, I don't think you have. No, you're very you're very good. You know your stuff there. But one of my best guests, Peter Wood from Avid Property, is the general manager of Avid Property and we're we're quite close and he's been in the building game like fifty years. He said the exact same thing and I have the most respect for that dude. And he has done some stuff that no one else has done in this game, and and that was his exact answer. Yeah. And and and that's looking at it from the perspective of yeah, where it all goes, pear-shaped and wild. And why is it that we keep seeing the same scenario over and over and over? And I'm like, w why is it? And then I'm like, that's it it's really is. Know your numbers and get get your better systems and procedures, you know. But but but what I just said there is nearly you could copy and paste that near for every industry that we deal every director that we're talking to, but but principally in in building because you're managing 10,000 things all at once, yeah, your systems are gonna be on the money and yeah, know your numbers for where where you're hemorrhaging, you know. Mate, thank you so much, Chris. That was fascinating, mate. And you are such an intelligent dude too. Like I would love to talk to you. Like outside of insolvency, and I know that's your gig, but You would be a wonderful business consultant. You know what I mean? To go into business. I like, I was thinking, you when you were talking about business, I'm like, I'd get this guy to diagnose any business. I'd just go in there and have a look. And that's why I asked the question, you know, do you guys go in there as a service? But I'm sure it's, you know, the not the tail end, but if someone's in trouble, that's when you may provide an overview. You just don't do it for a start up starting up. You're just helping them like make cash, you know what I mean? Because it's it's not what you do. But well, that's the level of intelligence that I think you've got. It's like honestly talking to you in terms of I think you would have seen it all. You would have heard stories about startups that have gone insolvent, you would have heard the the longest businesses and and how you've helped them kick on after, you know, a tough period. So mate. It's been a wild journey to get to here, Aaron. this was this was absolutely fascinating, mate. Thank you so much for coming on. Yeah, my pleasure. as I said, yeah, if you if you have some time in the next couple of months, you know who'll be knocking at your door. It'll be me. Not the Grimberry, but let's go. The happy boy of building. And and he'll be wanting you back on the podcast. So thank you so much for your time, Chris. Thanks, Aaron. Appreciate your time.