'Sad day' for shareholders as Carillion collapses

Hannah Rogers
January 17, 2018

But the head of the Federation of Small Businesses said thousands of jobs and livelihoods were now at risk because those firms would be at the back of the queue for payment.

The administrators will try to sell Carillion's assets, including outstanding contracts, in order to meet its credit liabilities.

But such optimism was tempered by the simple fact of one of the sector's biggest players going to the wall, with the government only willing to offer piecemeal help to minimize the disruption to public services.

He said the government knew of Carillion's reliance on sub-contractors, but continued to award the company lucrative work despite growing concerns about its finances.

Construction firm Carillion has gone into liquidation owing some one billion pounds forcing the government to step in to guarantee public services from school meals to road works.

More than 20,000 people work for the company in the United Kingdom, and 43,000 around the world. It collapsed beneath a mountain of debt worth £900 million and a pension deficit of nearly £600 million.

Over the past 12 months, Carillion saw its share price value decline by 94% spurred on by a series of profit warnings and an FCA probe.

He said: "Those teams are working normally today, answering customer calls and cleaning stations, and we are very thankful for their efforts in exceptional and hard circumstances". In February of last year Carillion signed a three-year extension to its agreement with Openreach until the end of 2021.

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"As we go forward, some services will be taken in house, some services will go out to alternative contractors in a managed, orderly fashion", he told the BBC.

Carillion said on Friday it was having "constructive discussions" with creditors, rejecting suggestions that they did not like the plan put forward by the company.

However, there are around 27,000 staff involved in its defined benefit schemes which are likely to be transferred to the Pension Protection Fund (PPF).

Mick Cash, the general secretary of the Rail, Maritime and Transport union, remarked, "This is disastrous news for the workforce and disastrous news for transport and public services in Britain".

Carillion had been the constructor for the new Midland Metropolitan Hospital in Smethwick, in the West Midlands, and the new Royal Liverpool University Hospital.

Mr Clark said: "It is important we quickly get the full picture of the events which caused Carillion to enter liquidation, which is why I have asked the Insolvency Service to fast-track and broaden the scope of the Official Receiver's investigation".

As well as the high number of people who might lose their jobs, a big company like this also has lots of small companies that do work for it and it could seriously affect them too.

Mr Lidington said the government had been preparing contingency measures since then and had only awarded work in the form of joint ventures, where other companies were "contractually bound to complete the work".

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