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Carillion’s immediate liquidation: Suppliers to feel the strain

15/01/2018

At a glance

Today’s news on the immediate liquidation of Carillion puts a lot of strain on the thousands of small and medium sized contractors working with the firm.

The UK’s second biggest construction company Carillion went into immediate liquidation today, threatening thousands of jobs. This came about following the failure of talks between Carillion, its lenders and the government to save the company.

The Wolverhampton-based company employs 43,000 globally with 20,000 of their employees based in the UK. The company is also reported to have over 7,000 sub-contractors and lists an international supplier spend of around £3bn on its website.

Following the news of its liquidation, the government has said it will provide funding to maintain Carillion’s work in the public sector. This could see a number of its public sector contracts brought in-house, although some huge contracts would still require private sector support.

However, question marks hang over its private sector projects and the financial well-being of sub-contractors working with Carillion. Payment delays or failures could well threaten the very existence of these suppliers, many of whom are small and medium sized enterprises. The Federation of Small Businesses (FSB) National Chairman, Mike Cherry, shed further light on this and called for Carillion’s small suppliers to be paid.

Memery Crystal Comment

Today’s sad news puts a lot of strain on the thousands of small and medium sized sub-contractors working with Carillion. The immediate liquidation (rather than administration) is an unusual step by the monolithic construction company. While it was known that Carillion was in serious trouble for some time now, entering administration would have given the company some breathing space while a long-term solution was sought. The immediate liquidation would also come as a sorry surprise to suppliers who may have expected a firm of Carillion’s size to be rescued.

If you are supply chain member affected by Carillion’s collapse and need to know the steps you could take to protect your position, please get in touch with our Head of Construction, Joanne Kelly using the details below.

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