Post updated 26/7/2018 – updates at bottom of page.
Carillion was the largest companies in the UK construction industry, however through what appears to be poor management it has built up debts of nearly £1.5bn and is now facing compulsory liquidation.
Carillion was one of the governments key suppliers and was working on key infrastructure projects such as HS2.
A statement was issued by its chairman, Philip Green, saying:
“This is a very sad day for Carillion, for our colleagues, suppliers and customers that we have been proud to serve over many years. Over recent months huge efforts have been made to restructure Carillion to deliver its sustainable future and the Board is very grateful for the huge efforts made by Keith Cochrane, our executive team and many others who have worked tirelessly over this period. In recent days however, we have been unable to secure the funding to support our business plan and it is therefore with the deepest regret that we have arrived at this decision. We understand that HM Government will be providing the necessary funding required by the Official Receiver to maintain the public services carried on by Carillion staff, subcontractors and suppliers.”
Knock-on effects
Unfortunately, the knock on effects of this action will affect may companies and people for some time to come. Carrilion employed 20,000 people in the UK alone, with a similar amount employed overseas. There are also a huge amount of sub-contracted firms carrying out work for Carillion and the fallout will undoubtedly affect them and their employees.
The one silver lining is that the government is looking to bring many of the projects handled by Carillion back in house, this means that hopefully many of the existing contracts will be fulfilled. The government has also said that it will be paying wages to Carillion staff in the interim, however, with the current and future projects being most likely being handed to alternative firms it will still put pressure on the companies who relied on Carillion for their income.
The accountancy firm PwC, who will be acting as liquidators, has issued a statement, confirming that the High Court has appointed the Official Receiver as liquidator for Carillion.
Six senior PwC executives will act as ‘special managers’ to assist in the operation.
PwC also says staff affected should keep working while the situation unfolds:
The Official Receiver’s priority is to ensure the continuity of public services while securing the best outcome for creditors.
Unless told otherwise, all employees, agents and subcontractors are being asked to continue to work as normal and they will be paid for the work they do during the liquidations.
They also confirm that Carillion’s investors have also been wiped out:
Unfortunately, as a result of the liquidation appointments, there is no prospect of any return to shareholders.
The government has set up a help page, information from which has been given below:
Carillion declares insolvency: information for employees, creditors and suppliers
Information about continuity of public services for employees and suppliers.
On 15 January 2018, a winding up order was made against Carillion Plc and the court appointed the Official Receiver as the liquidator.
To ensure continuity of public services, the companies will employ workers on the same terms and conditions as before:
- employees should continue to turn up for work and will be paid as normal
- any employee worried about their pension situation can ring The Pension Advisory Service (TPAS) on 0300 123 1047 for free and impartial guidance
- The Pension Advisory Service (TPAS) has also set up a special helpline number for members of these pension schemes: 020 7630 2715. Those already receiving their pensions will continue to receive payment
- a dedicated website has been set up to provide information for anyone affected – see www.pwc.co.uk/carillion and a dedicated helpline – 0800 063 9282
Information for employees
I work for Carillion – what should I do?
You should continue to turn up for work as usual and you will be paid. Please visit www.pwc.co.uk/carillion for more information.
What about my pension?
Anyone worried about their pension situation can ring The Pension Advisory Service (TPAS) on 0300 123 1047 for free and impartial guidance. TPAS has also set up a special helpline number for members of these pension schemes: 020 7630 2715. Those already receiving their pensions will continue to receive payment.
I’m worried about my job
JobCentre Plus, through its Rapid Response Service, stands ready to support any employee affected by this announcement.
Getting help with your application for redundancy payments
If you worked directly for the liquidated companies under an employment contract, and your employment ceases then you will be entitled to redundancy and other related payments from the Insolvency Service. See also our page on redundancy for Company Directors.
Self-employed contractors and agency workers who provide services to the companies are not eligible to apply for redundancy payments.
If you were an employee of the liquidated companies and your employment ceases you will receive from the Special Managers a case reference number (e.g CN12345678). Once you have this information you can apply online.
Further information
If you have any further questions, you can also contact the dedicated helpline: 0800 063 9282.
Information for suppliers
Customers, suppliers and sub-contractors should call their usual operational points of contact in the Group and visit the website www.pwc.co.uk/carillion.
Information for creditors
You will need to register as a creditor in the liquidation if:
- you haven’t been paid for goods or services you’ve supplied to the Carillion companies in liquidation
- you have paid these companies for goods or services that you haven’t received
Self-employed contractors and agency workers who provided services to Carillion are not entitled to redundancy payments and should speak to your usual point of contact in the companies.
What happened?
Carillion Plc entered into insolvency on 15 January 2018 along with a number of subsidiary companies in the group. All companies will continue to operate, providing continuity of public services, until further notice.
The Official Receiver has been appointed by the Court as liquidator of Carillion Plc and is now responsible for the day-to-day control and management of the liquidated companies in the group. Partners at PwC have been appointed as Special Managers to assist.
What contracts did Carillion hold?
Government contracts with Carillion include services for hospitals, schools, prisons and transport. Carillion delivered around 450 contracts with government, representing 38% of Carillion’s 2016 reported revenue. Key central government contracts are held with Department for Education, Department for Health and Social Care, Ministry of Justice and Department for Transport. These are not the cause of the company’s present financial difficulties.
Latest Updates
As of 26/07/2018
7 months since news of Carillion’s liquidation hit, media attention on the subject has hardly wavered. The most recent news stories include:
- The liquidation will reportedly cost taxpayers around £148m, according to the government’s report which indicated that they were “surprised” at the scale of the profit warning in July of 2017. In January 2018, Carillion had approached the government asking for £223m, but the Cabinet Office decided that the company should enter liquidation due to several concerns, many of which have proved to be reality…
- Carillion is reportedly under investigation by the financial watchdog for insider trading; a report published in May by those investigating indicated that the company’s failure was a “story of recklessness, hubris and greed”.
- A £200m Carillion prison maintenance contract has come under scrutiny, since Tory cabinet minister Chris Graying admitted that the deal was “completely unsustainable”; he was acting justice secretary between 2012 and 2015, when the contract was awarded.
- Evidence from Santander, who ran Carillion’s EPF (Early Payment Facility), indicated that Carillion had “ripped off” smaller contractors by “hid[ing] the true extent of its massive debt” through use of the EPF, which was voiced by MPs.
- In June, Irish company Sammon Construction collapsed as a result of Carillion’s liquidation, resulting in 200 more people losing their jobs. In March a similar story was circling the news as M&E Specialist Vaughan Engineering was forced to cease trading as a direct result of Carillion debt remaining unpaid.
Clearly, the effects of the construction giant’s liquidation are proving to be long-lasting, and reach far beyond the scope than most had anticipated.
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