THE COLLAPSE OF CARILLION
Background
The liquidation of companies within the Carillion organisation has been widely reported over previous weeks and it has affected a wide number of clients that we currently work with.
Carillion is construction organisation hosting large governments projects such as HS2, managing schools, hospitals, maintaining prisons and many more on a nationwide basis. It is reported that Carillion employed about 20,000 workers.
Various members of the Carillion group entered compulsory liquidation, which is a procedure where the company ceases to trade and its assets are realised and then distributed to its creditors on a “pro-rata” percentage basis. In most circumstances the realisations will be insufficient to pay creditors in full and in the case of Carillion, it appears that the likely realisations will be almost non-existent. It is estimated that Carillion collapsed with debt of £900 million and pension deficit of £587 million.
The collapse of Carillion is likely to impact not only those employed by the various group companies, but also its creditors and suppliers, many of whom are small to medium sized businesses that relied heavily on Carillion for their turnover. It is clear those businesses are likely to experience uncertainty as to the amount and timeline for payment of their services provided, if indeed any payment is received at all. In turn, that may present those businesses with serious pressures of their own.
What to do if you are in financial difficulty?
If you are a director of a company facing a serious financial impact from the collapse of Carillion or suffering any other financial pressures, it is strongly recommended that you seek professional advice as the earliest possible opportunity. As a director, you need to carefully consider your ability to trade or whether some form of restructuring may be required.
There are a number of statutory offences that can create personal liability for directors if steps are not taken to protect creditors at the correct time. Taking advice early allows you to mitigate the damage caused by insolvency related issues and often restructuring procedures can result in the best outcome for the business, its staff, its creditors and also for the business owners themselves.
At Bradley Haynes Law we have teams who have expertise in various fields of restructuring and insolvency, whether that be insolvency advice, employment advice or corporate re-structuring. We are a member of the Law Society’s, Lawyers for your Business and offer free initial advice for up to 30 minutes to discuss the issue raised in this update or any other business-related matter.
For a free initial meeting or call under the Lawyers for Business scheme to discuss your requirements, contact Julian at: julian@bradleyhayneslaw.co.uk or andrew at: andrew@bradleyhayneslaw.co.uk or call us on: 01905 900919. Please also visit our website – www.bradleyhaynessolicitors.co.uk
This publication is intended for general guidance and represents our understanding of the relevant law and practice as at 16 January 2018. Specific advice should be sought for specific cases; we cannot be held responsible for any action (or decision not to take action) made in reliance upon the content of this publication. Bradley Haynes Law is the trading name of ABC Worcester Limited (Company Number: 08736272) whose registered office is at Chilton House, 37 Foregate Street, Worcester, WR1 1EE. Bradley Haynes Law is authorised and regulated by the Solicitors Regulation Authority under number: 626524.