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Carrying on after Carillion collapse

15 February 2018

The collapse of the Carillion group has been well publicised. It is important to understand that not all companies in the group are currently in an insolvency process although more companies are being placed into a process (most likely following a review of their financial position by the Special Managers from PwC).

Much has been written in the press on why the group went into Compulsory Liquidation as opposed to Administration. The collective view is that liquidation pointed to the fact that the group had reached the point where there was no viable business to sell (as all it had was contracts on which the margins were too low to cover its ever growing liabilities).

Perhaps the real reason that Compulsory Liquidation was appropriate opposed to Administration was the potential personal liability that any Administrator would take on without any indemnity, particularly in relation to health and safety and environmental matters. In a Compulsory Liquidation the Official Receiver is indemnified by the Government. He has in turn appointed six partners from PwC as Special Managers. The powers under which they act will have been set out in a court order and are likely to be very similar to those of an Administrator.

In this initial phase, the Special Managers will be reviewing the financial position of all companies within the group. Suppliers and subcontractors have been advised that, unless told otherwise, they should continue to work and provide goods and services as normal and that any such goods and services supplied following the date of the liquidation will be paid for. Carillion group companies not yet subject to an insolvency process should be trading as normal.

There are a number of steps that we would recommend are taken by all Carillion customers and suppliers:

  • Check your contract counterparty – which Carillion legal entity are you trading with? Has it been placed into an insolvency process?
  • Review the event of default clauses for the following: rights to terminate/ ongoing obligations / step in rights
  • Establish whether defaults or defects are covered by insurance
  • Establish whether property or equipment can be repossessed or rental paid as an expense of the liquidation
  • Check the basis on which goods have been supplied. Has title been retained?
  • Check IP and rights of use to drawings, computer programs or other IP
  • Establish whether claims can be brought under performance bonds or guarantees.


Help and advice

BDO’s Business Restructuring team is experienced in dealing with the issues faced by businesses following an insolvency event. We can assist in a number of ways:

  • By explaining the current process and the specific implications for your business
  • Assisting with stakeholder discussions to help maximise returns and minimise losses
  • Providing advice on cash flow management and forecasting.



HMRC acknowledges that businesses that contracted with Carillion will be concerned about their ability to pay their tax. For eligible parties it is prepared to:

  • Agree instalment arrangements
  • Suspend any debt collection proceedings
  • Review penalties for missing statutory deadlines
  • Reduce any payments on account
  • Agree to defer payments due to short-term cash flow difficulties.

BDO’s team are experienced in leading discussions with HMRC where companies are experiencing difficulties in paying their tax. For help and advice please contact [email protected].



A number of lenders have recognised that the liquidation may have an impact on their customers and have put in place emergency measures to ease the pressure. Read an overview of the assistance available to eligible customers.


Your customers and suppliers

Businesses that are not directly affected should still consider the ripple effect of the collapse of Carillion and how it might impact their customers, suppliers and tenants and whether this in turn will have an indirect effect on their business.

PwC (as Special Managers in the Compulsory Liquidation of Carillion) has provided information on the current companies affected and provides information for the various stakeholders via a Carillion website.

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