Sydney-based lawyer operating under a Victorian practising certificate, Dominique Grubisa, makes millions selling seminars advising aspiring property magnates about how to find distressed investors and acquire their assets for less than market value.
In addition, she advises how to protect their assets from creditors, lawyers and even the Government. To sweeten the hefty four and five-figure sums these courses typically cost, the former barrister also offers legal advice and services on top of the tuition.
Since mid-2019, Grubisa has been spruiking her “Business Turnaround Program”, which is said to advise students ‘how to takeover and turnaround businesses for profit with no money down or minimal financial risk’.
Mrs Grubisa’s next seminar is set to be held this weekend, on Saturday 17 April. The program features high profile broadcasters and business commentators Peter Switzer and David Koch. Independent Australia expects that in this webinar, Dominique Grubisa will be promoting her purported asset protection product, Master Wealth Control (MWC, covered by IA in February).
Since the publication of that February article, the webpage promoting the MWC product has been changed. What was previously described as a ‘“Done-For-You” Lifetime Legal Service’ is now described as a ‘“Done-For-You” Lifetime Professional Service’. What was promoted as including ‘personalised legal advice’ for clients’ circumstances is now promoted as ‘personalised professional advice’. If drafting a will is not legal work, then what is?
The Business Turnaround Program costs $6,500 (or $7,800 if paid by instalments) and includes 12 months access to the ABR Gazette (ABRG). Publisher Equifax describes the ABRG as ‘a subscription-only commercial information service, collating public record information on companies and individuals, such as insolvency, bankruptcy and court data relating to debt’.
Dominique Grubisa encourages her students to use Equifax as a “secret weapon” to identify struggling businesses, then approach their owners in order to acquire them without any outlay.
Mrs Grubisa says she went to Equifax and asked them, “how can I reverse engineer the data?” they use for credit reporting purposes.
The Sydney solicitor claimed she then said to Equifax, “we want the risk, so that we can identify and approach those businesses.”
She goes on to tell students:
“The great thing about business and commercial space in Australia is that there is [sic] no privacy laws.”
However, Australia does have privacy laws.
In 2017, then publisher VEDA (since rebranded as Equifax) agreed to a conciliated resolution to a consumer complaint lodged with the Office of the Australian Information Commissioner (OAIC) about the ABRG. The complainant alleged the ABRG contravened the Commonwealth Privacy Act (1988) by publishing court judgment information about individuals, which was used for marketing by certain credit repair agencies and debt management firms.
Without admitting fault, VEDA then ‘agreed to phase-out individual judgment information not related to a business from the ABR Gazette’. On its website, Equifax states ‘the cover of the ABR Gazette includes the terms and conditions of use, restricting it to the assessment of credit risk’. In other words, subscribers must only use the ABRG to assess credit risk — not to seek out and target financially distressed businesses.
IA contacted Equifax for comment about the use of the ABR Gazette by students of Grubisa’s course for purposes that were outside its terms of use.
Equifax replied:
‘The ABR Gazette was decommissioned by Equifax in December 2020. While in circulation, the front cover of the ABR Gazette included the terms and conditions of use, restricting it to the assessment of credit risk. The terms and conditions specified that any use contrary to this may result in a subscription being immediately terminated.’
BUSINESSES BOUGHT WITHOUT SPENDING A CENT?
In her Business Turnaround Guidebook (BTG), Dominique Grubisa says that by employing “leveraging techniques” her students won’t spend money acquiring the business, dramatically reducing risk and exposure should things go wrong. She tells her students to challenge the status quo and look past “accepted wisdom”; not to assume that because so-called experts are telling you things can only be done one way that this is, in fact, the case. Making money involves finding smarter, “more sophisticated” ways of addressing challenges, Mrs Grubisa teaches. [BTG, pg 8]
She describes the conventional way of acquiring a business, with experts studying the contracts and books, as, at best, a flawed process and, at worst, a costly timewaster. With legal and financial experts being so keen to cover their behinds, she claims, they “pooh-pooh” just about any deal. [BTG, pg63]
Remarkably, Grubisa claims that the reading and practical work undertaken through her course provide her students ‘with more knowledge than many insolvency practitioners who work, day in, day out, with distressed businesses’. [BTG, pg 16]
It should be noted that to be registered as a liquidator, an “insolvency practitioner” must show 4,000 hours in the previous five years of relevant employment at a senior level in the external administration of companies, receivership and receivership and management.
Dominique Grubisa advises her students to assume control of financially struggling businesses if its woes are to be arrested. And having done that, not to “cede control” back to the owner. [BTG, pg 28]
Mrs Grubisa refers to some businesses as being “a dog with fleas” — ones that do not have the potential to be revived. She says students will not know this for sure until they have made an agreement with the owner, become involved and had a good look around. [BTG, pg 48]
In these cases, she advises, all payments to creditors should cease, telling creditors you are putting a halt on outgoings while they (the potential investor) undertake their due diligence. She says this is ‘stopping payments to avoid the potential for insolvent trading’. [BTG, pg 48]
The above advice is incorrect. Insolvent trading is where a company incurs a debt whilst insolvent — not where it pays off existing debts.
Mrs Grubisa further suggests a strategy for students of her course to acquire the assets of a company “truly on its last legs”. This involves first to cease trading, then advising creditors this has occurred. Grubisa claims that ‘you are then required to hold a board meeting to discuss the issue’. The next step, apparently, is to advertise the sale of the assets. [BTG, pg 49]
In other words, Dominique Grubisa’s advice is to students is to come into a financially distressed company and take control without paying any funds, refusing to cede control back to the owners, before selling the business’ assets.
Her next piece of advice to students is for them to lay on the table an amount they are prepared to pay. The surprising thing, she says, is that in nine cases out of ten, there will be no buyer. This, she asserts, is because the assets of an established business will usually only be of value to the business itself. [BTG, pg 49]
It is then recommended that the student’s company, set up to acquire the business, should invoice the distressed company for those assets. Mrs Grubisa says there need not be a strict timeframe on paying the agreed amount. The agreement may involve the budding business owner paying money over time, using the assets to generate income, she says. [BTG, pg 49]
IA spoke to an experienced solicitor about these strategies, who said he was very troubled by Mrs Grubisa’s advice:
Some of these strategies are quite concerning.
What does she mean by the student not ceding control to the owner? If someone comes in and starts directing the activities of the company to the director, they face the risk of operating as a shadow director.
The very first thing that directors of a company contemplating ceasing to trade and not pay creditors is to consult with a licensed insolvency professional and/or take legal advice from lawyer with a genuine understanding of insolvency laws. Certainly not taking instructions or directions from someone who has done a short turnaround course.
Suggesting that someone who does a short course and reads a manual has more knowledge than registered insolvency practitioners with many years of experience is very troubling.
In such circumstances, the directors should consider all other options including appointing an administrator. They should certainly not be transferring assets out of the company without obtaining formal valuations, nor transferring title to assets without receiving payment, or agreeing to be paid on deferred terms without seeking professional advice.
There are risks for all parties in such transactions. For instance, the directors of the company may be found to have entered into uncommercial transactions, for which they could be personally liable. If the buyer is effectively controlling the actions of the company, they, too, could be liable.
In September 2007, an article in the Victorian Law Institute Journal, the Legal Practitioners Liability Committee of the Institute (LPLC, in fact, the insurer of Mrs Grubisa’s legal practice) said:
‘If asked, most solicitors would say “vendor finance: don’t do it”, yet the Legal Professional LPLC still sees a regular flow of [insurance] claims in the small business area relating to vendor finance.’
The LPLC suggests solicitors to ‘advise your vendor client not to advance vendor finance in any form’.
In a three-day workshop held in November 2019, Dominique Grubisa offered her take on various insolvency concepts to attendees.
For example, Mrs Grubisa claimed there that, in relation to administration:
“What you need to know here for your purposes in buying distressed businesses is that an administrator has a duty to do better for the business and the creditors than a liquidation would. So we talked about this yesterday. How much will creditors ‒ people who are owed money ‒ get in liquidation? Pretty much zero yet, so anything we can do better than zero calls off an administration.”
As for receivership, Mrs Grubisa said:
Receivership is where someone steps into the affairs of the owner. It usually happens where there's something that's gone on or suspected fraud or everything doesn't smell right. And the creditors are rattling the cage. A receiver can be appointed to take over a company or business. Sometimes it happens because the owner dies. So it's a third party like an accountant, trustee coming and standing in the shoes. They're called a receiver because they're just helping the doors stay open and making the business decisions because for whatever reason, the owner can't or isn't.
The same solicitor mentioned earlier had these comments about this advice:
These claims are a long way off the mark. An administrator is generally appointed by the directors of a company. An administrator’s duty is not to “do better” than a liquidator. The role of the administrator is to take control of the company, and report to creditors about its financial circumstances and affairs.
The administrator prepares a report which deals with the options available to creditors. The administrator gives an opinion about which option is in the best interests of the creditor. It is then up to creditors that decide the company’s fate.
A receiver is not appointed because something doesn’t “smell right”, but rather by a secured creditor (often a bank) to take control of assets of a company covered by a security, such as a mortgage, where there has been a default in payment.
Moreover, targeting a business you suspect is insolvent based on judgments identified through the ABR Gazette pretty much negates any potential defences against uncommercial transactions.
I don’t think you would find any other lawyer recommending these strategies, because what is promoted as “reduced risk” is anything but. All this should be of serious concern to regulators.
When it comes to Dominique Grubisa’s costly seminars, it would appear to be a certain case of “may the buyer beware”.
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