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EXCLUSIVE: Grubisa’s standout success stories often anything but

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Dominique Grubisa has returned to giving "questionable" seminars on business acquisition (image via YouTube)

Dominique Grubisa continues to overstate her successes to her clients, reports David Donovan.

IN APRIL AND May last year, Independent Australia published articles regarding allegedly dodgy advice given by controversial lawyer Dominique Grubisa as part of her “Business Turnaround Program”. Then in June, we reported that business data provider Equifax had stopped dealing with Mrs Grubisa. Grubisa had been promoting the use of reports published by Equifax to target financially distressed businesses.

After a hiatus, Grubisa is back promoting her no money down supposedly no risk strategies to acquire businesses. Her latest seminar on business acquisition was held on Saturday 19 February.    

In the marketing for her program, Grubisa promotes the success stories of her clients.

One of the success stories Mrs Grubisa uses to promote her wares is of Amanda Bennetts.

In a video published on DG Institute’s Facebook page in August 2021, Ms Bennetts refers to businesses she acquired, or was in the process of acquiring, with no money down. One such business was Chawzaua, which Ms Bennetts describes as a really high-end skincare product.  

ASIC records show that a company called Chawzaua Australia, for which Ms Bennetts was a director, was incorporated on 24 September 2020 and then deregistered voluntarily on 24 February 2021.

By March 2021, an ad appeared on Seek Business selling the business. 

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Another ad appeared in September last year advertising that the business MUST BE SOLD and referring to an ownership relationship breakdown.

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An ad for the bulk sale of stock also appeared on Gumtree.

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Another questionable “success story” is that of a company called ST Fab. The case study on Mrs Grubisa’s website refers to her student Ben Trotter acquiring a 50% stake in the business in 2017.    

Despite being promoted as a success, records filed with ASIC show that ST Fab ceased trading in 2020 and the company, and two related companies, went into liquidation in 2021. 

Despite this Grubisa included the ST Fab case study in her marketing to the American clientele she sought to obtain in May of last year, in marketing for the Business Turnaround program last year, and for her most recent seminar.

On another page on the DG Institute, reference is made to the fact that when Mr Trotter was considering buying a share in the business, his mind turned to the fact that he was bankrupt. Mr Trotter’s bankruptcy ended on 13 December 2017.

Sadly, Mr Trotter is again bankrupt. A search of the National Personal Insolvency Index shows that Mr Trotter presented a debtor’s petition and his bankruptcy commenced on 7 February this year.  

Another company for which Mr Trotter was a director, Global Steel Solutions Pty Ltd, went into liquidation in July 2021. In his report to creditors, the liquidator of the company commented that the company may have been insolvent as at 31 October 2020 and possibly earlier. His report referred to the company incurring significant and ongoing trading losses from 30 June 2020.  

The liquidator noted that ascertaining when the company became insolvent would involve consideration and accumulation of evidence of key indicia of insolvency espoused in the judgment of Mandie J in the 2003 case of ASIC v. Plymin.

One such indicium referred to in that case is whether a company made any admissions to creditors (also by conduct) that it had a cash flow problem and had to make separate arrangements with creditors for part payment of debts. That is, if you tell your creditors you have cash flow problems and pay them part of what they are owed, that is a potential indicator of insolvency.

It’s worth looking at what advice Grubisa gives to her business turnaround students who are encouraged to seek out motivated business sellers and acquire them for no money down.

Grubisa says that after taking over a business and buying some breathing space to send cheques to the various creditors. The cheques should be for a sum that is only 20% of what the creditor is owed.

She says [BTP, p79]:

‘Mark each cheque “void if endorsement altered” so that the recipients can’t change the amounts to more than 20 per cent. Here’s the important part: on the back of each cheque, write “Negotiated as payment in full of outstanding debt”.’

Yet, if the creditor did change the amount on the cheque, they would be committing fraud!

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Mrs Grubisa’s training continues [BTP, p79]:

In the covering note for the cheque, you should explain that you have taken this step in recognition of the creditor’s distressed position. You should suggest they don’t cash the cheque, as it’s not what they are owed. However, say you understand if their need is so urgent they have to accept a proportion of what they are owed and move on.You should stress that while you are focused on getting the business back into the black, this is the best you can offer right now.

 

Your next step is to follow up with a phone call. Explain that you’re having cash flow issues and want to check their intentions regarding the cheque. Do they need to cash it? Explain that you need the cash to keep operating and if they don’t cash it within seven days you will cancel the cheque and use the funds elsewhere… Repeat these points in a follow-up email, again stressing that the opportunity to take the 20% settlement is valid only for the next seven days.

So, regardless of whether this reflects reality, you pressure creditors into taking a serious haircut on a debt genuinely owed.

So where did Mrs Grubisa gain the inspiration for this advice?

Well, IA suspects it comes from Gary Sutton, author of the Six-Month Fix. On page 14 of the book, Sutton gave very similar advice right down to the wording of the endorsements to be made on the cheques and that the offer is only open for seven days. Mr Sutton passed away in 2015.

Mrs Grubisa may wish to dust off the law books rather than use the material of an American author and revisit the rule in Pinnel’s case. For an incredibly in-depth consideration of this principle, we refer readers to the PhD thesis of University of Adelaide academic Dr Mark Giancaspro.

Grubisa gives other worrying advice on what to do if you think your company might be insolvent. She says, regardless of whether you are hopeful of turning around the business or employing a force-out strategy to capitalise on assets your first step should not be to consult an insolvency practitioner. By staying clear of them, she assets, you maintain the “defence of ignorance”.

Mrs Grubisa says [BTP, p98]:

“You technically don’t know you are trading insolvent unless you are advised of such by a lawyer or accountant. If you don’t ask, you can argue that you just came into the company and were trying to turn it around. Asking for professional advice is putting your own neck on the line.”

As commentary on the Plyim case indicates, turning a blind eye as a director is not a defence to insolvent trading.

Grubisa’s advice also contradicts advice given by ASIC.

On its website, ASIC says:

'If you suspect your company is in financial difficulty, get competent and proper accounting and legal advice as early as possible to increase the chance of the company's business surviving. Do not put your “head in the sand” and hope things will improve — they rarely do.'

As we regularly say when it comes to Mrs Grubisa, may the buyer beware.

You can follow founder and publisher Dave Donovan on Twitter @davrosz. Also, follow Independent Australia on Twitter @independentaus and on Facebook HERE.

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