United Kingdom construction group Carillion collapses as key talks fail

Manchester

In one of the biggest British corporate failures in recent years, Carillion went into compulsory liquidation after costly contract delays and a slump in new business left it swamped by debt and pensions liabilities of around £1.5 billion ($2.1 billion).

Carillion said in a statement to the London Stock Exchange: "Despite considerable efforts those discussions have not been successful, and the board of Carillion has therefore concluded that it had no choice but to take steps to enter into compulsory liquidation with immediate effect".

Mick Cashe, general secretary for the Rail, Maritime and Transport Union, said: "This is disastrous news for the workforce and disastrous news for transport and public services in Britain".

It said contractors had been reporting better terms of new trade in the past six months and the disruption from Carillion's collapse may make customers think harder about driving deals that are too harsh for the supplier.

Jim Kennedy, Unite's national officer for local government, said a public inquiry was now needed.

The COBRA response committee, which responds to disasters and emergencies, will meet on Monday night after Carillion was put into liquidation amid huge debts.

Nearly half of them are in the United Kingdom, though Carillion has a presence also in Canada and the Middle East.

As well as building QA, Carillion is responsible for maintaining 50,000 homes for the Ministry of Defence, is the second biggest supplier of maintenance services to Network Rail and is now involved in the HS2 high-speed rail line plan.

Economy Secretary Keith Brown said the Scottish government had been "working to manage or eliminate risks associated with Carillion's difficulties" since July past year.


The company said despite considerable efforts, discussions to secure funding have not been successful and has therefore decided to make an application to the High Court for a compulsory liquidation of the business.

The opposition Labour Party questioned why May's government continued to award contracts to Carillion despite its profit warnings and questioned why Britain had handed over so much of its public service work to private companies.

"It's regrettable that Carillion has not been able to find suitable financing options with its lenders, but tax payers can not be expected to bailout a private sector company".

Speedy Hire (SDY) is among the companies who may be affected by Carillion's collapse.

With 450 government contracts Carillion covered a huge range of activities, delivering 32,000 school meals a day to running the building of spy centre GCHQ and also being the biggest manager of military bases.

In a statement Toby Lewis, chief executive of Sandwell and West Birmingham Hospitals NHS Trust, said: "We regret this morning's announcement concerning Carillion, who are the constructor for our long awaited new hospital, which is nearly complete.

Staff that are engaged on public sector contracts still have important work to do", Cabinet Office minister David Lidington said.

The delayed £335m Royal Liverpool University Hospital is one of the projects where overrunning on costs led the contractor into trouble.

"We need urgent assurances the A14 improvements will not be delayed".

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