Scale of Carillion insolvency masks fundamental problems
Senior Associate Nat Young writes for Accountancy Live on the scale of issues within Carillion's insolvency.
Ordinary people may be shocked at reports it is expected to pay out less than 1p in the £, but this is far from unusual in an insolvency context.
Once a business fails, secured lenders will often take the most valuable and realisable assets, while assets such as goodwill evaporate. While the costs of the insolvency process are often a source of concern to creditors, those costs are rarely the reason for their losses.
Another example is the impact its demise will have on third parties. Carillion was particularly large, and was heavily involved in public contracts, so these effects are high- profile. On a smaller scale, however, insolvency of one business has a knock-on effect on many others.
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