Construction company Carillion, which in the UK and is involved in various government projects, including HS2, has gone into compulsory liquidation, the has reported.
“Government contracts with Carillion include services for hospitals, schools, prisons and transport”,
The 200-year-old firm also manages what has been described as “vital” services, in schools and hospitals throughout the UK. The company delivered around 450 contracts with the government.
Back in November, it was had issued three profit warnings in five months.
“No choice” but to enter into compulsory liquidation
In a statement to the London Stock Exchange, Carillion said that talks had taken place over the course of the weekend with its stakeholders, including Her Majesty’s Government, regarding options to “reduce debt and strengthen the group’s balance sheet”. It confirmed that as part of this engagement, it asked stakeholders for “limited short-term financial support, to enable it to continue to trade whilst longer term engagement continued.”
“Despite considerable efforts, those discussions have not been successful, and the board has therefore concluded that it had no choice but to take steps to enter into compulsory liquidation with immediate effect.
“An application was made to the High Court for a compulsory liquidation of Carillion before opening of business today and an order has been granted to appoint the Official Receiver as the liquidator.
“We anticipate that the Official Receiver will make an application to the High Court for Pricewaterhouse Coopers LLP to be appointed as Special Managers, to act on behalf of the Official Receiver, and we further anticipate that an order will be granted to that effect.”
The Chairman of Carillion, Philip Green, reportedly said that this was a “very sad day” and it was with the “deepest regret” that this decision had been reached.
Employees and agency staff told to go to work as normal
Carillion said that it understood that the government would be providing “the necessary funding required by the Official Receiver to maintain the public services carried on by Carillion staff, subcontractors and suppliers”.
The to go to work as normal and confirmed that they would be paid. that it was “very important” that employees and agency workers continued to work normally.
Unite warns collapse must not mean “business as usual” for big business
Unite union has said that this collapse must not mean “business as usual” for big business and called for an urgent inquiry into
“how a company that loaded itself with debt, which undercut competitors with unsustainable bids, which hoovered up vats of public money, and that had repeatedly alerted the government to its own financial shortcomings got its hands on so much of the public sector and taxpayers’ cash”.
Unite also raised concerns about how the firm’s collapse would impact the wider supply chain and called for PWC to put workers and suppliers at the “head of the queue for payment”, not the banks or the Carillion boardroom “whose greed and recklessness has brought this giant company to its knees and imperilled so much of our public services”.
Government has “serious questions to answer”
Meg Hillier, chairwoman of the Public Accounts Committee, would “get a raw deal”, as the government faced a “stark choice” between bailing Carillion or letting public services and projects suffer and that the government had “serious questions to answer about its role in allowing taxpayers’ exposure to escalate to this point.”