Rely on the most comprehensive, up-to-date legal content designed and curated by lawyers for lawyers
Work faster and smarter to improve your drafting productivity without increasing risk
Accelerate the creation and use of high quality and trusted legal documents and forms
Streamline how you manage your legal business with proven tools and processes
Manage risk and compliance in your organisation to reduce your risk profile
Stay up to date and informed with insights from our trusted experts, news and information sources
Access the best content in the industry, effortlessly — confident that your news is trustworthy and up to date.
With over 30 practice areas, we have all bases covered. Find out how we can help
Our trusted tax intelligence solutions, highly-regarded exam training and education materials help guide and tutor Tax professionals
Regulatory, business information and analytics solutions that help professionals make better decisions
A leading provider of software platforms for professional services firms
In-depth analysis, commentary and practical information to help you protect your business
LexisNexis Blogs shed light on topics affecting the legal profession and the issues you're facing
Legal professionals trust us to help navigate change. Find out how we help ensure they exceed expectations
Lex Chat is a LexisNexis current affairs podcast sharing insights on topics for the legal profession
Printer Friendly Version
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.
First published on LexisPSL Construction. Click here for a free trial.
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
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:
Many of the matters listed above will also apply. In addition, employers and developers should consider:
and ensure insurance is in place for the project and existing obligations under the contract have been complied with.
If any project security documentation is outstanding:
Many of the large infrastructure projects (including High Speed 2 (HS2)) do not hold direct contracts with Carillion and were awarded to joint ventures (JVs) consisting of a number of large contractors. Any adverse impact should therefore be containable.
The remaining CEK JV partners on HS2 (Eiffage and Kier) will now take over and complete Carillion’s works.
Carillion was also involved in a number of other JV infrastructure projects. These will also continue, although the cost to the other partners or contractors is likely to be significant. For instance, Balfour Beatty, which was in a JV with Carillion on
three highways projects in England and Scotland, now expects to take a £45m hit in 2018.
There may be other infrastructure projects such as elements of the Crossrail project where (solely) Carillion was engaged, and there the considerations highlighted above will apply.
A greater degree of financial due diligence and transparency in terms of the financial stability of companies would help to safeguard against collapses such as this in the future, but that would require significant reform of reporting obligations and
company structures. Whether that will be forthcoming remains to be seen.
HMRC has indicated that it will provide practical advice and guidance to those affected through its Business Payment Support Service (BPSS) and that ‘time to pay’ tax arrangements may be available to those affected by this collapse.
In addition, a number of banks are currently working with the government and trade body, UK Finance to provide financial assistance to small and medium-sized enterprises (by way of overdraft extensions, payment holidays and fee waivers) through what will
inevitably be a difficult period.
We anticipate that further important announcements will be made by the OR and his special managers over the coming days and weeks.
Interviewed by Jenny Rayner. The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.
0330 161 1234