Bankrupt sub contractor - gut says no

[Moonshine]

I have recently found out that one of my preferred sub-contractors was declared bankrupt last year, with the company he was running at that time going under, owing a suppler £8-10k.

 

His new company (completely different name / entity) has a third unknown party as the sole director, this maybe a sexist comment but that director is female, and is odd to me, and can't be him because as being bankrupt he can't hold a director position.

 

I was looking to employ him as labour only, but its raised red flags and my gut us saying no.

[Temp]

Tricky one. I certainly wouldn't want to pay in advance or end up committed to him in a big way. However if he's a genuine guy with recommendations I would be ok using him labour only - Initially for a fixed/limited task so there is a natural end after a week or two if it doesn't work out? 

 

 

 

 

[joe90]

Be honest and offer him cash on a daily/weekly basis, he may prefer it that way.

[SteamyTea]

Does he have a string of bankruptcies behind him?

He may just have been caught out by the last year's turmoil.

Going bankrupt for 8 to 10k us pretty small fry, not the kind of thing a serial bankrupt does.

 

Offer to pay in stages after the work is done, a take it or leave it offer.  Explain that the financial risk has transferred from him to you.

He should snack your hand off.

[nod]

There’s a lot of sole traders that are very good at what they do

 it terrible at keeping on top of all the red tape and paperwork

Plus one with Joe 

[markc]

All good advice above. Had he been a financial advisor then run like hell, but he could well be the best person you employ but fell foul of circumstances, bad advice or thinking running a business is a lot easier than it turned out to be.

[Onoff]

Best tenant I ever had was a bankrupt builder, had CCJs against him etc. Genuine guy, down on his luck through circumstances. The huge cash advance he waived was a factor... ?

 

Saying that, thereafter paid on the dot and did all repairs needed as his way of saying thanks for giving him a second chance. 

[Mr Punter]

When contractors go skint it is normally HMRC and suppliers that suffer financially.  If they are labour only and you just pay him for work he has done I don't see how you will lose out.

 

He may really like some cash as well that does not need to go to creditors.

[SteamyTea]

20 minutes ago, Mr Punter said:

He may really like some cash as well that does not need to go to creditors

If he is an undischarged bankrupt, the receiver usually has control of his finances.

 

[Adsibob]

On a building project 9 years ago I signed a £75k contract with a builder who I knew had previously been bankrupt. I was gullible and fell for his image and personality. He came across as really genuine and hard working and the bankruptcy seemed firmly in his past. He drove an expensive Land Rover and I thought he had obviously turned things around. He was recommended to me by my mother in law who apparently knew many of his clients. He never finished the job and a lot of his men were owed money.  A lot of money.  He left me with a 2.1m by 3.5m hole in the back wall of my house. I had to sue him for a loss of about £12k, at which point he admitted the car was just a lease and he didn’t have any assets worth suing for. In the end, to stop his new company going under, he had to borrow money off his parents to pay me what he owed me. For a man in his late 40s, I thought that was pretty embarrassing.

 So if like me, you are generally trusting and willing to give people the benefit of the doubt, go for it. But don’t be surprised if it ends in tears. 

[ToughButterCup]

Due Diligence. 

 

Look hard at things like CCJs. Pay by results , on itemised invoice and in arrears.  

[Bitpipe]

What's your exposure if you use him? Agree that you should be buying the materials and payment in arrears for work done.

 

From the company that did my basement to the guy who did my landscaping, they all said that you can be one bad client/job away from bankruptcy and its never the domestic clients but the commercial ones who owe them ££.  Bloke who fit our balcony and balustrade system was screwed for about £20k when the company I bought from went into administration. Rose like a Phoenix from the ashes though but he was out of pocket.