Carillion’s insolvency—infrastructure and construction

Carillion’s insolvency—infrastructure and construction

What happens now to the many infrastructure projects Carillion was involved with? Simon Lewis, partner in the construction and engineering team at Womble Bond Dickinson, assesses the implications of Carillion’s insolvency and outlines what steps those working with Carillion should take next.

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What steps should sub-contractors/suppliers to Carillion be taking in light of its insolvency?

The Official Receiver (OR) has indicated that his 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.

So, on the face of this advice, it remains ‘business as usual’ for those working with Carillion in the public sector.

However, approximately 60% of Carillion’s business is made up of contracts with the private sector, and on Monday, 15 January 2018 the government indicated that either the private sector counter-party must within 48 hours agree to fund future works itself, or those private sector contracts of Carillion would be terminated.

Against all this uncertainty, there are some immediate legal and practical issues that should be considered by all supply chain members:

  • consider whether you need to terminate your contract—some contracts may already be deemed to have terminated due to the OR being appointed as liquidator while others are likely to contain strict notification requirements
  • continue to comply with your own payment obligations to others—make sure you understand how this may impact your own obligations to make payments to others and ensure that all notices continue to be issued corr

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