carillion liquidation

Carillion: A Sign of Things To Come?

Unless you have been living under a rock for the past month, you will have undoubtedly heard the name Carillion mentioned in the news. In recent weeks, the UK was shocked to find out that this huge corporation was, in fact, proceeding with liquidation. As time progressed, numerous details unfolded about how the company was managed and effectively run into the ground. This article looks at what happened, and what effect this may have on smaller businesses within the UK.


What Happened to Carillion?


Carillion is, at the time of writing, the second largest construction and multinational facilities Management Company within the UK. This company had numerous contracts in various business sectors and was responsible for creating a series of high profile construction projects including Beetham Tower in Manchester and new facilities at the Royal Liverpool University Hospital. Effectively, Carillion grew too quickly too fast and failed to manage its finances efficiently to cope with their increased operations.

The company started experiencing financial problems as far back as 2016 and attempted to re-shuffle its organisation, drop unprofitable contracts, and sell some of its assets. Despite numerous efforts to salvage the business, the company struggled to pay its ever-increasing debts and the Financial Conduct Authority eventually become involved. From there, the severity of the situation became apparent and the government stepped in. At the time of the company’s official liquidation on the 15th of January, it was reported that this once multi-billion organisation had just £29 million of operating cash.

How Has This Affected The General Public?

Once the liquidation of Carillion was announced; 30,000 employees of the company and its subcontractors were effectively at risk of losing their job. Furthermore, whilst larges companies such as Balfour Beatty and Galliford Try can manage to take the strain; many small businesses reliant on Carillion’s contracts will now face an uncertain future. We have listed some of the main ways in which the collapse of Carillion could affect the general public.

– Employment uncertainty
– Pension uncertainty
– Will their bills get paid?
– Will they have funds to continue half-finished contracts?
– Could they potentially lose future contracts?
– Will redundancy pay be honoured?

As you can see the problems are real and thousands of workers livelihoods and finances could be affected. Smaller contractors who have relied on business from Carillion could now find themselves without work – or even without pay. Furthermore, construction contracts that are incomplete risk remaining incomplete until new contractors can be employed to take over the work. In short, there is a myriad of businesses and individuals who are previously reliant on Carillion that now face uncertainty.

Carillion Collapse Future Consequences

Aside from the pointers mentioned above, the collapse of Carillion also has a range of severe far-reaching consequences that must be addressed. Firstly, it must be understood why this disaster happened, and why the government didn’t step in sooner. Could the government have done more to prevent liquidation? Should contracts have been moved in 2017 when the financial problems became apparent? Should businesses be allowed to grow at an unrestrained pace without analysis or safeguarding?

There are many questions that need answering, and we can expect other large businesses in a similar position to Carillion to come under great scrutiny in the near future.

Writer’s Bio: Lewis Murawski is the marketing and business development manager at Diem Legal and Managing Director of Kahootz Media.

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