Paper bags and Bankruptcy

“So-and-so couldn’t negotiate their way out of a paper bag?”
Paper bags and Bankruptcy

That’s not great is it…?

Do you know what is great?

Today’s video is a GREAT story about How this subcontractor negotiated its way out of bankruptcy, watch it by clicking here  or continue with this quick read.

So we helped this Rebar Subcontractor negotiate their way out of bankruptcy.

What’s REALLY great about the story is it’s not how you’d imagine the story to go.

Here goes…

  • This Rebar Company won a contract
  • They Signed a contract
  • The Contract was lump sum and also had rates as part of it.

This meant that when the Project commenced it was at the very low end of the steel price… somewhere near the beginning of Covid.

So in a nutshell before the steel price started going completely bonkers.

The problem is they were LOCKED INTO A PRICE.

The steel price rose by about 60%

Most subcontractors operate within the industry average of about 15-20% for their margins.

Therefore, if something goes up by 60% margins are GONE.

This Rebar Subcontractor came to us with the reality that they were haemorrhaging money.

The reality was:

  • No rise and fall clause
  • No escalation clause

They’d also gone to the client who said that they were locked into a price.

It was looking bleak.


We explained to the subcontractor how the scenario was likely to go…

  • If you continue to work on this project you will go under

So something had to be done to avoid bankruptcy.

  • You could leave the project and get hit with damages.

BUT If this happens they’ll still have to find a replacement, which will cost them money.

PLUS the price of steel has gone up so their base rate will be affected.

We went back to the client with the FACTS…

  1. We’re losing money because of the price of steel
  2. We will go out of business if we keep working on the project
  3. So it’s better to leave the project
  4. Either way, you will have to replace us.
  5. Whoever you replace us with has the advantage of updated steel prices so you will pay way more.
  6. Plus this will cause huge delays.
  7. Can we come to an agreement so we both win?

The Rebar Subcontractor agreed that they would just complete the project to break even.

The client agreed.

This was a major success and the Rebar Subcontractor went from strength to strength.

The Lesson here is to approach every problem from multiple sides…

  1. Your Side
  2. The Client’s Side
  3. The Contract

Understanding how to negotiate and find practical solutions will save you money.

Signing better contracts will also help you save money.


We want you to be the MOST SUCCESSFUL you can possibly be. That’s why we put together content with tips and advice that is tried and tested.

For more contractual advice, Quantum Contract Solutions is here to guide and assist you through everything contract related. Let’s reduce risk in your contracts and save time and money, just click this link to get our FREE case study to show you how clients just like you are doing it.

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