What's Happening?
A report by PwC has revealed that sixty Carillion companies are unable to pay unsecured creditors, more than seven years after the construction giant's collapse. Carillion, once the second-largest contractor in the UK, fell into compulsory liquidation in January 2018, leaving liabilities of £7 billion and major projects unfinished. PwC, appointed as a special manager to assist liquidators, published a distribution schedule indicating that 60 of Carillion's businesses have no prospect of an unsecured dividend. Only 23 subsidiaries have potential cash to pay suppliers, while the status of Carillion Plc remains uncertain. The insolvency of some Carillion businesses is being managed outside the PwC process. The Insolvency Service and Department for Work and Pensions advised creditors to refer to updates from the companies' officeholders for details on potential distributions.
Why It's Important?
The inability of Carillion companies to pay creditors highlights the ongoing impact of its collapse on the construction industry and its stakeholders. Subcontractors and suppliers have faced significant financial challenges, with many unlikely to receive any payment. This situation underscores the importance of government measures on late payment practices, which are currently under consultation. The collapse of Carillion has had a lasting effect on industry expertise, skills, and capacity, emphasizing the need for resilient and sustainable payment practices. The government's proposals to overhaul payment practices, including charging interest to tardy payers, aim to address these issues and prevent similar situations in the future.
What's Next?
PwC has called on businesses to come forward if they believe they are owed money by one of the 23 companies with a chance of paying out. At the appropriate time, PwC will contact all known creditors of the Carillion liquidation companies where a distribution is possible, providing details on how to submit claims. The schedule is based on current information and is subject to change, depending on the value of assets realized and administration costs. The government is consulting on measures to improve payment practices, which could lead to legislative changes to support industry resilience.
