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Live updates | Carillion to enter liquidation with immediate effect

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Carillion is to enter liquidiation with immediate effect after weekend-long talks with its banks and the government failed to secure any agreement.

Are you affected by Carillion’s collapse? Call the New Civil Engineer newsdesk for an off the record chat on 0203 953 2870 / 0203 953 2876.

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16:56 Lidington addressed supply chain concerns: “Companies and individuals in the supply chain working on public sector contracts have been asked to operate as usual. Normally in the event of a company going into liquidation the smaller firms working for it move across to the new contractor when it takes on the work.”

16:51 “The majority of the small minority of contracts awarded after the July profit warning were joint venture where the other companies are now contractually bound to take on Carillion’s share of the work,” Lidington says, “for example, the Kier group [HS2 joint venture] confirmed this morning in a release to the stock exchange that they have now put in place their contingency plans for such an eventuality.”

16:45 The Offical Receiver has a statutory duty to investigate the failure of the company, Livington said, including any misconduct by the directors. This will include “not only the directors at the point of its insolvency but also that of any previous directors, and whether their actions will have caused detriment to the creditors, and this includes detriment to any employees who are owed money.”

16:40 “The action that we have taken is designed to keep vital public services running rather than provide a bailout of a commercial company.

“The role of the Government is to plan and prepare for the continuing delivery of public services that are dependant on these contracts, and this is what we have done.

“The cause of Carillion’s financial difficulties is not for the most part connected with its government contracts but with other parts of its business. Private sector contracts account for 60% of the company’s revenue and the vast majority of the problems the company has encountered come from these contracts rather than from the public sector.

“Our top priority is to safeguard the continuity of public services and we have emphasised this to the receiver.” - David Lidington 

16:30 “Let me be clear that all employees should continue to turn up to work confident in the knowledge that they will paid for the public services that they are providing…The Government is also doing everything it can to minimise the impact on sub-contractors and suppliers, who like employees will continue to be paid through the official receiver.” - Cabinet Office minister David Lidington

A helpline has been set up for support staff, he said.

16:20 Cabinet Officer minister David Lidington is addressing the House of Commons.

He said: “It is regrettable that Carillion has not been able to find suitable financing options with its lenders and I am disappointed that the company has become insolvent as a result.

“This is however the failure of a private sector company and it is the company’s shareholders and lenders who will bear the brunt of the losses. Taxpayers should not and will not bail out a private sector company for private sector losses or allow rewards for failure.

“I fully understand … that both members of the public and particularly employees of companies in the Carillion group will have concerns at this time. The Government is doing everything possible to minimise any impact on employees.”

16:00 The Public Administration and Constitutional Affairs Committee has launched an inquiry into how the Government and public sector manages the risk of outsourcing the delivery of public services, including the risks of concentrating a large number of contracts with a single company.

Committee chairman Bernard Jenkin said: “Seeing what has happened to Carillion and given the concentration of outsourced public sector contracts into such a small number of large companies, we need to ask if the rules on oversight and accountability of public services need to change?”

15:06 The Financial Reporting Council could investigate Carillion. It released a statement that said: “We have been actively monitoring this situation for some time in close consultation with other relevant regulatory bodies. We have powers to investigate the circumstances relating to the audit of Carillion as well as the actions of the relevant accounting professionals. We are obliged to follow due process and will make a further statement on this matter shortly.”

Carillion is already being investigated by the Financial Conduct Authority. 

15:00 Government will hold an emergency COBRA meeting over Carillion’s collapse later today.

Defence minister Gavin Williamson said: “We’ve been monitoring this very closely, and working with our industrial partners. There will be a COBRA meeting today later on today to look at addressing some of the most immediate issues.”

14:30 Institute of Directors head of corporate governance Roger Barker said  that effective governance was “lacking” and whether the board and shareholders exercised “appropriate oversight prior to the collapse” should be investigated.

He said: “There are some worrying signs. The relaxation of clawback conditions for executive bonuses in 2016 appears in retrospect to be highly inappropriate. It does no good to the reputation of UK business when top managers appear to benefit in spite of the collapse of the organisations that they are responsible for.”

14:15 Ramboll managing director and ACE chairman Matthew Riley said: “If ever we needed more evidence and examples of the need for industry reform, this is it! Carillion are a good company with a long heritage but are the victim of an industry business model that doesn’t work. It was an accident waiting to happen.

“Public sector procurement is part of the problem and the way they have sought to manage, share and transfer risk through the supply chain. For an industry that operates on wafer thin margins, to take on more risk, particularly for high value contracts, was always a dangerous strategy. We need a more sustainable business model moving forward and the government needs to play a more active role in helping the industry to perform.”

13:40 Cabinet Office minister David Lidington is expected to make a statement about Carillion at about 4.15pm in the House of Commons. This morning he said: “It is regrettable that Carillion has not been able to find suitable financing options with its lenders but taxpayers cannot be expected to bail out a private sector company.” 

12:55 “The news of Carillion entering insolvency is clearly a significant blow to the UK construction sector. While this will present the sector with a number of challenges, CITB’s priority is to do all it can to ensure that Carillion apprentices can continue their training so their skills are not lost.” - Construction Industry Training Board (CITB) chief executive Sarah Beale

12:39 What does compulsory liquidation mean?

According to the government, when a company is liquidated, its assets are used to pay off its debts. Any money left goes to shareholders. The firm in question needs a validation order to access its company bank account.

Compulsory liquidation is when a company is unable to pay its debts and it applies to the courts to liquidate it.

12:29 PricewaterhouseCoopers, which is running Carillion, says suppliers and staff should continue as normal.

It said to suppliers: ”Unless advised otherwise, all agents, subcontractors and suppliers should continue to work and provide goods and services as normal, under their existing contracts, terms and conditions.

“You will get paid for goods and services you supply from the date of the Official Receiver’s appointment onwards. Over the coming days we will review supplier contracts and we’ll contact you concerning these soon. Goods and services you supply during the liquidation will be paid for. A letter will be sent to suppliers shortly containing further instructions.”

It said to workers: “Notwithstanding the liquidation, the company will continue your employment on the same terms and conditions as before. You should continue to attend for work and you will continue to be paid as normal.

“Employees of the group should turn up to work, unless told otherwise. Please continue to turn up to your normal place of work. It’s very important that you continue to work normally.

“Agency workers should also continue to work normally and the agency will be paid for the work done. If you have any questions, contact the usual operational point of contact in the group.”

12:24 Galliford Try and Balfour Beatty to plug £80M hole on £550M Aberdeen Western Peripheral Route contract.

A statement from Galliford Try said: “The terms of the contract are such that the remaining joint venture members, Balfour Beatty and Galliford Try, are obliged to complete the contract. Our current estimate of the additional cash contribution outstanding from Carillion to complete the project is £60m to £80 million, of which any shortfall will be funded equally between the joint venture members.”

12:16 Carillion’s careers team was still Tweeting job opportunities this morning, a reminder that it continues to trade.



12:05 RMT demands immediate protection and guarantees for Carillion workers. General secretary Mick Cash said: “RMT will be demanding urgent meetings with Network Rail and the train companies today with the objective of protecting our members’ jobs and pensions. The infrastructure and support works must be immediately taken in house with the workforce protected.”

11:50: Specialist Engineering Contractors’ Group chief executive Rudi Klein called for clarity on how the government will support Carillion’s supply chain. He said: “We need to try and clarify what help is available to the supply chain, every bit of work that Carillion did with infrastructure was outsourced so we want to know what support the government is going to provide the supply chain. There are millions of pounds of unpaid payments to the supply chain, I know lots of SMEs are concerned about whether they’re going to get paid, and whether they’re going to get their retentions back.”

He added: “I can’t get my head around the fact that you have the government awarding contracts to Carillion when technically they were insolvent…Would anybody in their right mind do this? Giving work to a firm that is minus £1.5bn.”

11:23 “Alarm bells have been ringing for over 6 months about Carillion’s finances. The government must answer questions on what due diligence measures were undertaken before awarding contracts to Carillion worth billions of taxpayers’ money” – Jon Trickett, Labour shadow Cabinet Office minister.

11:16 The Insolvency Service says Carillion delivered around 450 contracts with government, representing 38% of Carillion’s 2016 reported revenue.

11:00 Association for Consultancy & Engineering (ACE) chief executive Dr Nelson Ogunshkin said the liquidation has “major ramifications” for the industry. He said: “The challenges of low profitability and negative cash flow experienced by the contracting sector confirm that the current procurement process is broken. A new business model, coupled with client leadership, is urgently required to make our industry fit-for-the-future and ensure we won’t experience difficulties with other major players.”

Former National Infrastructure Commission chairman Andrew Adonis wrote on Twitter: “[The government] has big questions to answer. Why were they awarding contracts to Carillion after the exposure of its problems in July? What contingency planning did they do for the collapse? 20,000 jobs & huge projects at stake!”


Carillion was asking for short term financial support from its lenders to enable it to continue to trade while longer-term engagement continued over ways to reduce its reported £900M debt and strengthen its balance sheet. These talks continued all weekend, but ended in failure.

Carillion has told the stock market this morning that, “despite considerable efforts”, those discussions “have not been successful”, and that 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 of Carillion.

The company said that it anticipates that the Official Receiver will make an application to the High Court for PricewaterhouseCoopers to be appointed as Special Managers, to act on behalf of the Official Receiver.

Carillion chairman Philip Green said it was a “very sad day” for Carillion, for its colleagues, suppliers and customers “that we have been proud to serve over many years”. 

Green said that over recent months “huge efforts” have been made to restructure Carillion to deliver its sustainable future but that he and his team have been unable to secure the funding to support their business plan. “It is therefore with the deepest regret that we have arrived at this decision,” he said.

Green added that the government will be providing the necessary funding required by the Official Receiver to maintain the public services carried on by Carillion staff, subcontractors and suppliers.

Civil Engineering Contractors Association chief executive Alasdiar Reisner said this must now be the priority for PWC.

“Terrible news regarding Carillion. [It is] vital that there is now co-ordinated action to support employees and the supply chain.”

Unions had been calling for the government to take Carillion’s contracts in-house as fears mounted over the potential collapse of the construction and services firm, which employs 19,500 people in the UK.

Employees must not be “kept in the dark any longer”, said Unite assistant general secretary Gail Cartmail. GMB national secretary Rehana Azam added: “Handing Carillion bosses a blank cheque bail out is completely unacceptable – company bosses should not be rewarded for failure with public money.”

Cabinet Office senior civil servants and pensions regulators met on Friday. A spokeswoman for the Pension Protection Fund said it would act to protect the interests of Carillion scheme members and levy payers. 

Top politicians including business secretary Greg Clark, transport minister Jo Johnson and justice minister Rory Stewart attended urgent talks over potential contingency plans on Thursday evening, the Financial Times revealed. Government representatives continued to attend talks over the weekend.

The government confirmed it had risk mitigation plans in place “where appropriate”. A Downing Street spokeswoman said it was being “kept informed of the steps it [Carillion] is taking to restructure the business”. 

The Cabinet Office has hired law firm Dentons to assess the government’s exposure to the crisis-hit company, the London Evening Standard reported. New Civil Engineer has contacted Dentons for comment. 

Carillion is a major government supplier, with several long-term contracts, which led to speculation that the government could bail out the embattled construction group. But fury would have greeted the move, with the company having paid out a record 18.45p a share dividend on the back of 2016’s results.

Carillion’s partners on High Speed 2’s main civil works packages will ensure that the contract is delivered should there be any change to its role in the joint venture, New Civil Engineer reported last week. Questions are sure to be asked, however, over how a procurement process as complex and costly as HS2’s could miss Carillion’s financial vulnerability.

The Financial Conduct Authority has already announced it is investigating the firm over the “timeliness and content” of  announcements made last year.

In July the firm announced a shock £845M writedown, which saw 70% wiped off its share value and chief executive Richard Howson step down. Two months later it reported a further writedown of £200M.

The Wolverhampton-headquartered group issued a third profit warning in November that saw shares drop more than 50% to 15p.

In December the construction giant confirmed deferral of the test date for both its financial covenants from 31 December to 30 April this year.

Timeline of events 

10 July 2017: Company announces shock profit warning that sees 70% wiped off the value of Carillion shares. Chief executive Richard Howson steps down

17 July 2017 : Carillion awarded contract for the first phase of the HS2 rail link in a joint venture with Eiffage Genie Civil and Kier Infrastructure and Overseas. HS2 Ltd carried out extra due diligence on Carillion, it says

11 September 2017: Group finance director Zafar Khan leaves the company

29 September 2017: Carillion reports a £1.15bn loss and further writedown of £200M

17 November 2017: Contractor issues third profit warning of the year and shares drop by more than 50%

3 January 2018: Financial watchdog FCA announces it is investigating Carillion over the “timeliness and content” of announcements made last year

8 January 2018: Emergency meeting with creditors announced, shares rise by 20% but fall after Carillon says there are “no material developments that support this share price increase”

10 January 2018: Carillion holds crunch talks with creditors

11 January 2018: The government confirms it has contingency plans in place in the event of Carillion’s collapse and high-profile ministers hold urgent meeting

12 January 2018: Cabinet Office civil servants meet with pensions regulators and EY are reportedly on standby as administrators. It is reported that the government have hired Dentons lawyers to help assess the situation

15 January 2018: Company announces it is going into liquidation with immediate effect


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