Carillion collapse: Small firms' support ends in 2 days


It looks all quiet at the site of the new £335m Royal Hospital in Liverpool.

Its debts grew to £900 million, an impossibly large sum to manage when its share price was going into freefall during the course of a year ago.

Lancashire County Council leader Geoff Driver said an agreement in 2013 with Carillion saw it assist in disposing of surplus property but there were no other contracts.

#Carillion: Tens of thousands of jobs at risk, along with public services and major infrastructure projects.

Carillion, Britain's second largest building company and a major government contractor, went into liquidation Monday.

So how has it got into this mess? What's more the government should have seen this coming and now it needs to answer for this mess. It has over-reached itself. The company operates in the UK, Canada, and the Middle East and has 43,000 staff with 20,000 of them based in the UK.

Asian traders continued their blistering start to the year on Monday with most markets rising but Hong Kong's record rally came to an end. But the company's banks are now understood to be unwilling to lend it any more cash.

The company has been struggling to reorganize for the past six months amid debts of about C$1.54 billion and a pension deficit of 590 million pounds.

The company's share price, which tumbled 28.95 percent to 14.20 pence in reaction, was subsequently suspended by London's Financial Conduct authority regulator.

Labour's business spokesperson Rebecca Long-Bailey wanted to know why the government carried on awarding contracts to Carillion when it was clearly in trouble. These contracts provided some temporary relief for the firm's books. This government, under Theresa May, has awarded it work on 450 projects, according to Reuters. Yet Whitehall, in their naivety, sailed serenely on.

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Whether the government did its due diligence or not is a question that needs answering.

A cabinet member said to me yesterday, in all seriousness, that it would have been "illegal" for the government and public-sector bodies to have rejected bids from Carillion for government contracts in the second half of past year, when it was very publicly warning that its profitability was far less than it had been expecting and nearly the entire City of London knew it was in serious difficulties.

After the collapse of construction firm Carillion, the company's various defined benefit (DB) pension funds have entered assessment by the Pension Protection Fund (PPF).

"There are also serious concerns over the future of all those people now working for Carillion and around what will happen to its pension fund".

"When the dust settles on this sorry saga, there is also a wider lesson to learn about the concentration of public contracts in the hands of a small number of very big businesses". PFI/PPP contracts can return an "extreme profit margin", in some cases as much as 70 percent per annum.

With the help of experts in company turnarounds, some have managed to clean up the contracts under their management and bounce back.

Many of Carillion's suppliers face becoming insolvent because they will receive less than 1p for every pound they are owed by the company, a top accountant has said. Balfour Beatty and Galliford Try put out statements yesterday saying they would each take a £40m hit to their profits.

Enterprise and ambition in business have been the lifeblood of Britain for centuries.

Carillion collapsed after banks refused to provide any further financial support following fruitless rescue talks over the weekend.