Carillion’s insolvency—how to protect yourself

Carillion’s insolvency—how to protect yourself

Following the liquidation of Carillion earlier this week, Ray O’Connor, Devinder Singh, Russ Hill, Graeme Bradley and Roy Grist of Squire Patton Boggs LLP look at the practical issues for subcontractors, employers/developers and funders.

Original news

The government has committed to deliver all public sector services following the insolvency of Carillion PLC. Carillion announced the decision to initiate insolvency proceedings following a meeting with its bank-ers and lenders. The official receiver has been appointed by the court as liquidator, along with partners at PwC that have been appointed special managers. The government has also said it will provide the funding required by the official receiver to maintain public services. Legal experts suggest the collapse of Carillion indicates some worrying signs in terms of UK business.

Introduction

It has recently been announced that Carillion has gone in to compulsory liquidation. The companies we understand are currently affected are as follows:

  • Carillion Plc
  • Carillion Construction Limited
  • Carillion Services Limited
  • Planned Maintenance Engineering Limited
  • Carillion Integrated Services Limited
  • Carillion Services 2006 Limited

If you are involved in a construction, engineering or FM project that includes Carillion, you need to consider your options and how to protect yourself.
In this article, we share some of our thoughts on issues to consider if you are a:

  • Sub-contractor
  • Employer/developer
  • Funder

Current State of Affairs

The official receiver has been appointed as liquidator and a number of partners from global accountancy firm PWC have been appointed as special managers to assist the official receiver in the liquidation.

Special managers are officers of the court whose powers are conferred upon them by the court. They will be expected to carry out an initial evaluation and review within a few days, covering matters such as cash flow projections, trading accounts, potential recoveries and protection of creditors’ interests.

The official receiver’s priority will be to ensure the continuity of public services while securing the best outcome for creditors. All employees, agents and subcontractors are being asked to continue to work as normal on the basis that they will be paid for the work

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About the author:
Kathy specialises in restructuring and cross-border insolvency. She qualified as a solicitor in 1995 and has since worked for Weil Gotshal & Manges and Freshfields. Kathy has worked on some of the largest restructuring cases in the last decade, including Worldcom, Parmalat, Enron and Eurotunnel.