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Government backing refusal led to Carillion liquidation

15 January 2018

Further reports about the collapse of Carillion have revealed that the government refused to provide £20m to support its efforts to remain in business.

This was confirmed during emergency meetings over the weekend, according to The Guardian, leading to this morning's announcement.

Civil servant David Chapman, who works for the Insolvency Service, has been appointed as the company's liquidator.

HW Fisher insolvency partner David Birne said the decision to place Carillion into liquidation suggests that there is very little value left in the business.

Industry bodies, politicians and trade unions are continuing to express concern for the company's employees, contracts and supply chain partners.

Among its 450 public sector contracts are a number of joint ventures, which will also result in difficulties for partners having to make up for the lack of input from Carillion.

The example of Balfour Beatty has been publicised by a number of news outlets, which is said to be facing a £45m cost.

Cabinet Office minister David Lidington defended the refusal of the government to provide further support, stating that contingency plans had been drawn up in July 2017 for other contractors to take over Carillion contracts if it failed.

Questions over why the government awarded £2bn of contracts to the company while it issued profit warnings were asked by Labour shadow Cabinet Office minister Jon Trickett.

A Financial Conduct Authority investigation is also being conducted over announcements made by Carillion between December 2016 and July 2017.

More than £800m in retention payments were held by Carillion, according to the Building Engineering Services Association (BESA) and the Electrical Contractors' Association (ECA), which will have a major impact on its supply chain if lost in the liquidation process.

The two associations are now calling for the company's SME contractors to be allowed to continue working and be paid directly.

They also call for government support for the Retentions Bill introduced to Parliament last week by Peter Aldous MP, to ensure retention money is held in a deposit protection scheme in future.

Calls for information on sums owed have been issued by Build UK, of which Carillion was a contractor member, to create a clear picture of the impact on the company's supply chain.

These can be sent to "in the strictest confidence", said the statement.

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