The Carillion collapse is putting thousands of employees and up to 30,000 businesses at risk. Here’s our short guide to what to think about if you are affected.
What has happened?
Carillion, the UK's second largest construction company, has suffered financial difficulties after losing money on a number of large contracts, which contributed to debts of at least £1.5 billion. Having issued three profit warnings, Carillion went into compulsory liquidation on 15 January 2018.
What is liquidation?
Liquidation, also known as winding-up or dissolution, is a legal process to bring a commercial venture to an end. The aim is to ‘wind up’ the company, and redistribute its assets among the businesses it owes money to, and any shareholders.
Who is affected?
The huge breadth of Carillion’s business, particularly its involvement in large public-sector contracts, will have a huge impact on UK plc. In addition to Carillion’s employees, businesses that it traded with will also be affected. This includes contractors that Carillion is in partnership with on projects, and the wide range of subcontractors and suppliers it used, including consultants such as architects and engineers.
What could the impacts be?
Carillion owes a great deal of money to its subcontractors and suppliers, and this ‘bad debt’ has the potential to cause extensive financial difficulties for them. It is likely to affect their cash flow, which can, in turn, affect a business’s ability to trade profitably. In extreme situations, it can cause subcontractors and suppliers to go into liquidation themselves.
What should I do if my business is affected?
Directors of affected businesses need to understand their personal duties and liabilities in the face of financial difficulties. Because of the unique size, nature and politics of the Carillion collapse, this particular situation may not be straightforward.
Will I be made redundant?
Employees are often the last to know about liquidation, often because the employer tries to project an image of ‘business as usual’ while it attempts to trade through a financial difficult period. Nevertheless, liquidation is a ‘terminal event’ that will more than likely result in redundancy. Read more about the legal process of redundancies and what you can do about it.
Need some advice?
We’re here to answer your questions if you have been affected. Simply tell us your situation, and we can outline your legal options.