Don’t get screwed….contractors’ bankruptcy

bankruptcyYes, we did the due diligence on the unfamiliar contractor and my client still got screwed.

Wait how’d that happen?  The contractor went under. We checked references and assorted sources, but could not forecast what was coming.

Contractors have it tough.

There are many balls to juggle at the same time. The current projects, the schedules, the difficult subs, the unreasonable suppliers, the customers that can’t make up their mind, the damn building inspectors, the weather, the nagging architects, the uptight banks- you get the picture.

Most contractors get into the business because they love to build. Most begrudgingly, do the books and administrative duties in order build and create, and make a living. Most builders, architects and engineers have no training in business basics like accounting , cash flow modeling and yet these skills -and lack thereof usually spell doom to their businesses-not the proficiency to ply their trade.imgres

The most common problem-

Stems from funds that become commingled among projects.  Quickly, payments related to one project are being used for another and then something happens on one project, like a slow-paying owner….and the impact ripples among other projects.  That’s why it is critical in every project to get “lien releases” which are a form of receipt that the General Contractor provides the owner showing that the subcontractors and suppliers are being paid for  their project by the General Contractor.

What a creep

Our General Contractor, in this case in Rye NY, not only deceived our client (and several others) and our firm by fraudulently issuing fake lien releases, but also forged expired licenses, created phony invoices, etc. He will be facing the consequences.

While this is the first one of these situations we’ve faced in 20+ years it reminds us to be ever vigilant, scrutinize all details and skeptical.

We had to engage a new contractor, face additional costs, incur schedule hiccups, and lots of frustration….You really want to avoid this situation.

Call me for more details and safe-guards that may be suitable for your project- Steve 914 980 5532