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Specialists in Logistics & Transport Law - Call 01254 828300

The Demise of Carillion: What Might it Mean for my Business?

A winding up order was made against Carillion Plc and other companies in its group on 15 January 2018 and the court appointed the Official Receiver as the liquidator. This basically means that Carillion has gone bust.

Carillion is a leading international integrated support services business and Britain’s second largest construction company. It employs around 43,000 people (an estimated 20,000 of which were in the UK) and operates in the UK, Canada and Middle East. It is a significant supplier to the Government, working on building infrastructure projects such as the HS2 project and maintaining prisons and schools.

Carillion is well-known for using local suppliers of which many were small companies, who are now waiting to learn if they will be paid. It is estimated that around 30,000 businesses are owed £1bn in unpaid costs, meaning many jobs and pensions are at risk. Cabinet Office Minister David Lidington has warned that businesses working for Carillion on purely private sector deals will only have two days of government support.

The repercussions of the failure of Carillion are likely to be far reaching. They may affect your business or your customers’ businesses in the following ways:

• If you hold an operator’s licence, you are required to meet certain financial standing requirements. Poor or reduced cash-flow could cause you difficulties in meeting your financial standing requirements. If you can no longer do this, you are required to notify the Office of the Traffic Commissioner within 28 days of such change. Some businesses wouldn’t survive without their operator’s licence. Our regulatory team can speak to the Office of the Traffic Commissioner, try to negotiate a period of grace and get you the best possible outcome.

• You may find that customers who are usually “good payers” may now not be able to pay on time or at all. If you are an unsecured creditor, you may well be at the back of the queue. Our Debt Collection team have a number of cost-effective packages which will get the most commercial outcome for you.

• If this happens, you may start to lose contracts and have to lay staff off. Our Employment team are able to advise on redundancy programmes for businesses of all sizes.

• Regrettably, you may end up considering an insolvency arrangement for your own business. This may involve selling off assets. You should be aware that your operator’s licence cannot be transferred as part of an asset sale and any buyer would need to have their own. Insolvency Law is a very specialist area. We can put you in touch with specialist Insolvency Practitioners who can guide you through the process. Our Corporate team is also very experienced in advising on distressed purchases or sales and in particular what are known as “pre-packs”. This is where a business deal is negotiated and the business is sold just before becoming insolvent.

If the demise of Carillion is likely to affect your business, we recommend getting specialist advice and acting quickly. For more information, please contact Jo Dawson-Gerrard on 01254 828300.

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